In the ever-shifting ecosystem of streaming video, ad-supported platforms offer content creators and audiences something new: premium content for free. Of course, it’s a model pioneered by television broadcasters ages ago, but in the streaming economy, it’s a relatively rare alternative to the subscription model.

The most recent indication of this trend was Viacom’s agreement to acquire Pluto TV, the leading free service in the U.S. The deal marks a significant moment in Viacom’s evolution. At $340 million, it’s the company’s largest digital deal to-date and will expand Viacom’s distribution and advanced advertising capabilities with a direct-to-consumer platform that’s already operating at scale and is known for delivering quality programming and a “lean-back,” TV-like channel-surfing experience. It also makes Viacom a player in the $8 billion ad-supported streaming market, which is expected to double in size in the next five years.

“Our strategy is fundamentally to grow the presence of our IP into as many places as possible to create value,” said Viacom President and CEO Bob Bakish in an interview with Bloomberg Television on Wednesday morning. “We’re tremendously excited about Pluto TV.  It's a differentiated asset in the marketplace, it supports Viacom’s strategy on multiple levels, and, when we look at the deal, we think it’s a tremendously attractive financial expression …  This company is worth multiples of what we paid. That's the type of M&A we are focused on, and we think it is extremely value-creating.”

Ad-supported video-on-demand (AVOD) services give consumers a no-cost alternative to OTT subscription services and cable bundles. It’s a fast-growing corner of the streaming market, especially as content creators work to find new ways to reach audiences across devices without cannibalizing their audiences on other platforms. Earlier this year Amazon launched an ad-supported video channel, IMDb Freedive, and Comcast announced plans to launch a free streaming service for its pay-TV subscribers in 2020.

"While peers are fiercely going head-to-head in the OTT/DTC subscription space, [Viacom] is jumping into a white space on the ad-supported side – and this is the only comprehensive free service where people are actually watching on big screen TV sets," wrote media analyst Marci Ryvicker of Wolfe Research in a note to clients. "Bottom line, Pluto is another means of moving [Viacom]’s innovative strategy forward – with collective incremental revenue streams becoming a needle-mover."

“In some respects, we're zigging as everyone is zagging,” said Bakish during an interview with CNBC. “The market is segmenting. The vast majority of subscribers continue to be at the mid-to-high price point in the basic cable sector. You have more mid-pricepoint $40-45 segments. You’ve got SVOD players now in the teens, and of course, then you’ve got free … From a Viacom strategy standpoint, we love how this fits in.”

For Viacom, free streaming TV is a way to reach a broader audience in a way that will provide more value to its advertising partners. The acquisition means that Viacom will have a direct connection to Pluto TV’s 12 million monthly active users and will be able to monetize billions of high-quality addressable advertising impressions. Viacom can sell this new ad inventory to external advertisers and agencies, as well as use it to market its subscription products and content. As Adweek reported, the acquisition could draw additional consumers to NOGGIN and Comedy Central Now, and also segue into distributing content from Viacom Digital Studios.

According to The Wall Street Journal, “acquiring Pluto TV will allow Viacom to increase the digital audience for its programming, while giving the owner of networks such as Nickelodeon and MTV instant scale for its online advertising business.”