In anticipation of NATPE Global 2024, currently taking place in Miami with a primary focus this year on the burgeoning phenomenon of FAST channels, we at allrites have chosen to delve deeper into the FAST channels landscape as well.
Everything Old Is New Again: FAST Channels Revive the Spirit of Broadcast TV
In 2022, a significant milestone was reached: Streaming TV consumption in the US surpassed Cable TV numbers for the first time in history. This shift isn't surprising considering that, on average, an American holds four streaming subscription accounts. Amid the overwhelming array of Video-on-Demand (VOD) services available to viewers, the US notably birthed a new-old model in 2014 known as FAST Channels, pioneered by Pluto TV.
For consumers, FAST Channels address two main problems, especially highlighted during the pandemic: decision-making fatigue and cost concerns. Unless someone is eagerly anticipating a blockbuster movie or an original series release, television content is often consumed to pass the time, leading many individuals to spend considerable time flipping through their subscriptions in search of that perfect piece of content. FAST Channels alleviate this decision-making burden by functioning similarly to standard Cable TV; viewers tune in to whatever is being aired at the moment, offering a streamlined and free alternative.
Those Who Make FAST Spread Fast
Advertisers: Advertisers are pivotal in the revenue generation of FAST services. With the shift towards digital advertising, spending on streaming platforms has seen a substantial rise. According to Statista, video ad spending in the US is expected to reach $85 billion in 2024, with a significant portion allocated to streaming platforms. Advertisers leverage the targeted and engaged audience of FAST channels to deliver their messages effectively.
Tech Providers: Technology providers offer the infrastructure and tools necessary for the seamless operation of FAST services. They enable functionalities such as ad insertion, content delivery, and user experience optimization.
Content Owner, Distributor or Content Marketplace: Content rights holders supply the content that forms the backbone of FAST channels (content is king, remember?). Licensing agreements and partnerships with these entities are vital for curating a compelling content library.
Platform: The platform itself orchestrates the amalgamation of content, advertisements, and user experience. In other words, a FAST channel needs to be added to an existing aggregate of channels, for example on Samsung TV Plus or LG TV.
The landscape of FAST service stakeholders can vary significantly. For instance, Viacom's acquisition of Pluto TV in 2019 united the platform and content owner under one entity. Viacom aimed to use Pluto TV as a marketing tool for its linear brands and a distribution platform for existing channels like Awesomeness TV.
Another scenario involves a content owner creating a digital TV channel and licensing it to a FAST service, showcasing a unique combination of content creation and distribution.
However, the absence of any key stakeholder among tech providers, content owners, or the platform itself may demand additional resources, such as industry expertise or extra investments, to compensate for the missing element. Collaborative efforts among these stakeholders remain crucial for a successful FAST service and adapting to deviations from this alignment requires creative resource acquisition and strategic manoeuvres to ensure the service's effectiveness and success.
Who Gets a Piece of a Pie: FAST Service Monetization Strategies
Flat-Fee or Traditional Licensing: Operators may opt for a flat-fee or traditional licensing model, where content is licensed for a fixed annual fee. This approach provides stability in revenue generation for a TV content owner but might limit scalability based on viewership growth. This model might be too costly for the upcoming channels as it requires the upfront fee.
Revenue Share: Revenue-sharing models involve sharing a percentage of the revenue generated from ads with content right owners. This incentivizes content owners as they directly benefit from the platform's success. In this scenario 100% of the ad inventory is being sold by a FAST platform, which is, in most cases, favourable by the content owners as they often do not have resources to deal with selling ad inventory. Usually, the revenue split is 60/40 in favour of the channel provider, although 55/45 or 50/50 splits are becoming more common.
Ad Inventory Share: Platforms can also share a portion of their ad inventory with content owners, allowing them to sell ad space within their content. This model encourages content creators to produce engaging content that attracts advertisers, benefiting both parties. This is the most common monetisation model in the US.Both revenue share and inventory share models will require some revenue to be allocated to a FAST technology provider.
Back To the Basics: What Content Works For FAST?
Certainly, the content preferences within the FAST channel industry showcase a fascinating diversity, varying significantly from one country to another. What audiences find appealing in terms of entertainment differs widely based on cultural inclinations and regional tastes. For instance, genres like crime and horror might resonate well in certain countries, while others might exhibit a strong preference for anime and documentaries.
While the FAST TV industry is relatively young, it has begun to exhibit discernible viewing patterns akin to its predecessor, Cable TV. FAST TV often serves as ambient or background entertainment, reminiscent of comfort viewing. Viewers frequently lean towards non-premium content or previously aired shows that feature strong intellectual properties (IPs) and familiar actors. This familiarity with characters or stars adds a sense of comfort to the viewing experience. However, the distinction between new and old content may not universally apply to every country. A title might be considered dated in one region while remaining completely unseen in another.
Following in the footsteps of Cable TV, the FAST industry has also embraced news and sports content. Securing rights to live or recent sports events can be exceptionally challenging. However, certain sports-related content, such as game replays, sports documentaries, and interviews, continues to garner substantial interest among viewers. Notably, some sports broadcasters in the UK have ventured into the FAST industry, making their content available on FAST platforms, further enriching the diversity of available programming.
FAST & Challenging
The FAST TV industry grapples with some crucial challenges.
First is the scarcity of comprehensive viewership data and content preference statistics. This scarcity makes it difficult for platforms to make informed decisions about content acquisitions and partnerships. Varied interpretations of available data among programming heads create ambiguity—some advocate for niche content while others favour mainstream options. This lack of unified insights extends to revenue-sharing monetization model, leaving content owners blind to their content's performance. Without access to detailed viewership metrics, content owners struggle to optimize their offerings and make data-driven decisions for better engagement and revenue.
Secondly, expanding the FAST Channel to a truly global scale is challenging at this stage, although achieving a multiregional presence is feasible. This difficulty arises due to the language barrier and the varying advertising maturity levels across markets, which holds significance as the FAST model relies heavily on advertisers. The disparity in spoken languages poses a hindrance to creating a seamless viewing experience. Subtitling alone often fails to alleviate this issue effectively. However, merging markets that share the same language is a plausible approach. Notably, it's unsurprising that the UK, Canada, and Australia are projected to emerge as the biggest FAST TV markets after the US by 2027, given their shared language and market potential.
The holders of children's entertainment rights encounter significant barriers to entering the FAST landscape, and the path forward remains uncertain. Kids' content and associated advertising face stringent regulations, complicating the sale of ad inventory. In some cases, the inventory sold for existing channels falls below the anticipated level by more than half, underscoring the challenges in effectively monetizing this segment within the FAST environment.
FAST Represents Opportunities
FAST channels are undeniably an explosive phenomenon. However, despite their rapid growth, FAST TV currently accounts for only 2.5% of the global TV ad spend. This statistic indicates that the FAST landscape remains relatively nascent, offering immense potential for expansion. All four stakeholders within FAST TV, and even beyond, have the opportunity to capitalize on being early adopters and carve out a significant share of the global FAST TV market.
Furthermore, if you require assistance with one of the primary components of FAST TV —content — allrites can provide valuable support. Our extensive content library comprises over 140 hours of global content, a substantial portion of which is available for integration into FAST channels. For more information, feel free to reach out to us.