Exploring the FAST Channel Explosion in the US
The media industry is full of acronyms, and one that has been making noise lately is FAST, i.e., free advertising supported streaming TV. Some may say free ad-supported TV has been around for decades, so what is different this time? The one nuanced difference is streaming in FAST versus the plain old-fashioned cable or satellite delivery. Nuanced though it may be, it makes all the difference. It lowers barriers to entry, throwing open the doors to an entire ecosystem of niche channels, including FAST service enablers. Additionally, it unlocks addressable and targeted advertising capabilities. Dive into an in-depth explanation of why FAST channels are emerging as a credible alternative to subscription video on demand ( SVoD) services across the spectrum of audiences, publishers and advertisers.
A Free Business Model
The origin of FAST channels can be traced back to the launch of PlutoTV in 2014; their recent explosion in popularity can be attributed to a string of strategic acquisitions starting in 2019, including Fox acquiring Tubi for US$440mn and Amazon is renaming its IMDB TV to FreeVee.
There isn’t a specified delivery method attributed to FAST. It could either be linear or video on demand (VOD). An example of a linear method is a rolling news wheel, while for VOD, you can think of a library selection of all of Pink Floyd’s concerts available on-demand. The critical thing to remember is that irrespective of the delivery method, the FAST service business model signifies that it is free for viewers, unlike subscription-based services such as Netflix.
FAST services offer a lean-back experience where viewers switch to a channel to follow a program or let it play in the background. This is rather different from the ‘lean-in’ experience of a subscription video on demand (SVoD) like Netflix, where viewers first undertake the cognitive load of swimming through oceans of library content before binge-watching them. The business model of FAST aggregators initially mostly followed the old cable TV playbook, which was the re-runs of old shows for which there was still a long-tail audience cohort that was up for it, and then they ran ads against them.
A Growing Ecosystem
FAST channels in the United States (US) range between 1400 to 1500 per industry estimates, with news as a genre alone accounting for around 493 channels. In 2023 alone, US FAST channels are expected to bring in close to US$5.5Bn in revenue, with global revenues estimated at around US$ 12Bn by 2027.
The FAST ecosystem in the US falls into two categories based on ownership:
1. Content studio owned FAST platforms, e.g., NBCU that owns Peacock, and Fox that owns Tubi
2. Connected device owned, e.g., Samsung and RokuTV
Unparalleled Visibility into User Insights for Targeted Advertising
The connected device owners, connected TV (CTV) or smart TV manufacturers such as Samsung and LG, clearly serve as the gatekeepers to the content ecosystem by controlling the end device on which entertainment is consumed. They also have access to a wealth of first-party data using automatic content recognition (ACR) technology. For instance, on their Samsung TV, if a viewer watches a series via the Netflix app, followed by an Adele concert on their Blu-Ray player connected to the Samsung TV, and ends the journey with a video review of a Tesla model on YouTube, the original equipment manufacturers (OEM’s) insights team has full knowledge of the entire viewing history.
This is unlike the OTT streaming app team that will only have data about the series streamed on the app without any knowledge of the Adele concert or the Tesla car research. This gives the original equipment manufacturers (OEMs) unrivaled clout in the advertising ecosystem as they know exactly which ads the viewers have been exposed to on streaming platforms such as Pluto TV as well as on a linear TV channel such as CBS that a viewer watched on the same device.
OEMs are also incredibly sticky as it’s unlikely that viewers will throw out their CTV sets at least five years before, unlike a standalone app like Netflix that could be uninstalled after a month. This stickiness and first-party data allow OEMs to create a highly personalized user experience (UX) for viewers as soon as the CTV set is switched on.
An Edge over Subscription-based Models
FASTs owned by content companies (like Tubi TV) have the advantage of being able to dip into a vast catalog of exclusive library content owned by the parent company, i.e., Fox, that has a strong content lineage enabling it to curate and make programming decisions, unlike the device players that are relatively new to the content game.
Independent FAST services such as Plex and Crackle Plus in the future could be acquisition targets for larger players like Disney and Netflix, who do not have a FAST play of their own.
Breaking Through the Clutter a Major Hindrance
Some key challenges faced by channels on FAST platforms include discoverability, as breaking through the clutter of over 1500 channels in the US alone are vital to being able to monetize attention and engagement. As an example, the Washington Post launched its FAST channel on Amazon FreeVee in May 2023, and they have to contend with a crowded 493 news channel space to monetize their content effectively.
Audience measurement, too, remains a challenge, with all players in the ecosystem seldom agreeing on the numbers, methodology, and transparency available. Moreover, in linear TV, the ad inventory was sold on a day-part basis (i.e. primetime or late night) regardless of how many viewers actually watched the ad. The inventory on FAST is sold along digital lines, such as cost per 1000 impressions (CPM), i.e., an ad impression counts only when a viewer sees it. Currently, the US FAST market has the highest CPMs for FAST globally.
Leveraging the FAST Ecosystem
In conclusion, if you’re a newspaper or a TV network that doesn’t yet have a FAST channel but does have Android or iOS apps, it makes sense to get on a FAST service. It probably doesn’t merit building, maintaining, and distributing a whole library of Apps that would install on FireTV, Roku, etc., in which Tech Mahindra has deep expertise.
But what may be a more pragmatic approach would be to work with Tech Mahindra to help cost-effectively set up your FAST channel in the cloud, including scheduling, playout, and electronic programming guide(EPG). Simultaneously Tech Mahindra could also help you strike distribution to get placement on FAST platforms and begin monetizing.
