In January 2019, Viacom purchased Pluto TVTM for $340 million. In February of 2020, Comcast acquired XumoTM for over $100 million, and in March, Fox purchased Tubi for $440 million.
What these purchases all have in common is the acquisition of what is called FASTs, or free ad-supported streaming TV services. The other common denominator, and the reason content distributors are paying close attention: FAST advertising revenue.
With estimated monthly users in the ten of millions for the most prominent services, these brands are betting big on FASTs. For content distributors looking to connect with even more consumers, launching a FAST channel could be a logical move to enhance direct-to-consumer digital reach and engagement.
What Are FASTs and Why Content Distributors Should Care?
FASTs are free ad-supported streaming TV services that allow viewers to watch streaming content for free. The services can be either on-demand, or increasingly, as a linear channel that leverages that VOD content.
The most popular FASTs are Pluto TV (ViacomCBS), Xumo (NBCU), Tubi (Fox), Peacock (NBCU), The Roku Channel (RokuTM), IMDbTV (Amazon), and Samsung TV+ (Samsung). What’s interesting to note, is that most of these FASTs are distributing a mix of content that you might have already seen on cable TV for the last 40 years: indie movies, older network TV series, and online video.
FASTs are not a new concept – AVOD (advertising-supported video on demand) has been around for years now, and it is expected that over $25 billion will bespent on ads in the AVODspace by 2025. FAST extends the offering of ad-supported video content, using dynamically inserted ads to provide linear channels to connected devices, free of charge to anyone who wants to watch.
These new channels can be constructed from assets in your existing SVOD or AVOD libraries. Some channel originators are even creating channels out of short-form content that would normally be delivered over platforms like YouTube and using it on FAST channels because they can add to their suite of personalized channels, and because, with the right channel origination platform, the channels can be created quickly and easily.
FASTs broaden the reach of your content library and build a larger subscriber base due to the enhanced user experiences that come as a result of more personal content. More content owners are using their older content libraries to build niche FAST channels as both a source of revenue, and a vehicle for driving subscriptions to more premium content.
FAST, Connected Devices and Viewing Times
FAST channels are largely consumed on connected devices, like Roku boxes, Samsung Smart TVs, or ChromecastTM sticks. This is important because streaming sticks/boxes and smart TVs dominate viewing time.
Source: Conviva, 2020
Longer viewing time lends itself to ad views, something that makes content distributors and advertisers happy. Compared to traditional cable ads, consumers are winning too.
Many FAST channel platforms are committing to a reduced ad load – around 8 to 10 minutes an hour. This provides a more desirable experience for content consumers, who are used to 10 to 16 minutes per hour.
The Evolution of Linear TV as an Experience
The positive viewer perception is a major driver for FAST channels, and it’s paving the way for notable developments in the FAST-linear TV experience.
One clear development is how operators make FAST channels visible to select for the viewer. Some operators have decided to place the FAST linear channel as the first channel you see, placing linear channels front and center. Right when you open the app viewers have the FAST channels as a top pick.
An approach that places FAST channels in a prime spot in the selection screen is like comparing apples-to-apples with the experience viewers would get when they turned on their (cable) TV and a channel is already on. Making access to the FAST channel easily works well when the viewer just wants something entertaining without having to spend too much time figuring out what would be best to watch.
Pluto TV even rolled out an interface where viewers could flick through channels much like they would on their set-top box. The success here shows that some viewers still truly enjoy the serendipity of stumbling on a show they didn’t know they wanted to watch. The experience is all about perception and understanding how your viewers like to watch content.
Another development in the FAST linear TV experience is how FASTs are sparking innovation. The unveiling of a large content library can attract new audiences that are eager to watch what’s been stored away. This large, and often niche, the linear option can help hasten the cord-cutting switch and will likely see most viewers combine their SVODs alongside their favorite FASTs for additional programming options.
The FAST Market
Let’s take a look at the types of FASTs services available as well as some of the major players in the space.
Types of FAST Services
Platform agnostic:FASTs that are available across multiple operating systems. Examples include Pluto TV, Peacock, Roku, and Xumo.
Platform exclusive:FASTs that are only available on one operating platform. Examples include LG, Samsung TV+, and Vizio Watchfree.
There’s channel differentiation, too. Some channels are FAST platform exclusives, some are shared among multiple platforms.
Another way to distinguish a FAST service is whether the service is completely free, or if it has available premium content.
Pure free:A FAST with only AVOD and/or linear channels.
Premium available:A FAST supported with premium offerings such as pay-per-view, or SVOD options.
Popular FAST Services and Possible Audience Reach
28.4 million estimated monthly users
196 exclusive channels
48 shared channels
10 million estimated monthly users
104 exclusive channels
77 shared channels
The ROKU Channel
12 exclusive channels
42 shared channels
20 exclusive channels
2 shared channels
Other FAST Services
Samsung TV Plus
vMVPDs Also Have Linear Content
Much like the Peacocks or Pluto TVs that are essentially large content owners that have launched ad-supported free tiers, multichannel video programming distributors (MVPDs) are also players in the FAST game, because they too have linear content to distribute to the masses.
Hulu + Live TV:includes 65+ live channelsandthe entire Hulu streaming library including movies, full seasons of TV series, and original content.
Sling TV:includes 30+ channels such as news, live sports, and on-demand movies and shows.
YouTube TV:includes 85+ live channels including live sports, Comedy Central, PBS, and BET as well as available premium add-on networks.
Philo:includes 64 channels with live and on-demand content with available premium add-ons and DVR.
The Value of Ad insertion on FAST Channels
The payoff for channel originators when it comes to FAST services is in the CPMs – the amount you get paid per 1,000 ad views. These are called “Impressions” in the advertising industry. For a traditional cable channel, this can be hard to measure but is typically estimated between $10 and $25 depending on the content and time of day. Ad insertion on a FAST channel is always dynamic and typically targeted at the household or the individual. This level of targeting commands CPMs of $40 to $50 per 1,000 impressions, for households and individuals, respectively.
This means you can make between $0.60 to $1 for every hour a consumer watches your FAST channel. With the average person consuming more than 5 hours of content each day (according to Nielsen), this adds up, fast. Hulu, one of the largest ad-supported content platforms, makes about $15 per month in ad revenue per subscriber. Let’s just take that in: they make more on advertising than they charge for their premium, ad-free package, which is currently $11.99!
Pluto, the largest aggregator of FAST channels to date, had it's first $1m ad revenue day in 2019 and has already broken $3m a day as content consumption has increased.
Value comes not only from your content but how you distribute it. Because you can create these channels from your existing content libraries and deploy the necessary video delivery software in the cloud, you have minimal to zero upfront capital investment to get your FAST channel up and running. Think about deploying in days or weeks, versus months or years.
Technology & Considerations for Launching a FAST Channel
If your organization is wanting to delve into the growing FAST channel ecosystem, there are some core technology and business decisions you’ll need to make.
TheVOS360 platformincludes a scheduler to visually build your content into an original linear channel, with automation tools. Say goodbye to the hassle of spending your day building schedules and freeing up your time to focus on more core business matters. Harmonic’s scheduler is lightweight but has the features you need to make operating your channel easy – automatically recurring series, graphical branding and overlays, and business rules to handlead insertionwithout having to configure everything by hand.
Next, you’ll need to decide how to get your channel to your viewers. Do you already have a streaming video platform, or is this a new space for you? If you’ve got a digital presence already, you might want to try launching your channel there – it gives you more control, but then you need to drive all the views yourself.
You might consider partnering with one of the platforms that have already had wild success delivering channels like yours to connected devices – Pluto and Xumo are the biggest names, and you can work with more than one of them to get the widest audience for your content. The VOS360 platform is available today, compatible, and offers flexibility for operators to go either route: delivery through a platform, or through any of your own existing digital spaces.
Working with a platform has the major advantage of getting your channel out there, but be aware they are going to take a share of your ad revenue for the privilege – somewhere between 30 to 40%. If you aren’t able to drive large traffic numbers on your own, the volume these platforms bring means that this isn’t an unfair trade – Pluto brings over 24 million viewers who use the platform regularly! It’s something to consider.
Working with existing platforms also takes care of one of the other important needs for FAST channels and for the best TV experience – an app. If you’re targeting connected devices, and you are if you’re looking to launch a FAST service, then you need a way to actually deliver your channel to devices.
Underestimating the complexity of this step could cause your company some serious headaches down the road. While you can do it yourself, you then bear the burden of getting your app certified on every platform you want to deliver on. If you decide the platform route isn’t for you, there are a couple of commercials options that will construct a fully branded app experience on all these devices for you, that’s ready out of the box.
Last, but certainly not least, you need a way to sell your ad inventory. Ad inventory is where the ads go when inserted into your content. If you sign up with a platform, there’s a good chance they’re making this choice for you, but not always. The leading digital advertisers are good choices – Freewheel or Google Ad Manager – but you could also work with a technology partner in this area. SeaChangeTM and Cadent are both making this an area of focus, optimizing your inventory so nothing goes unsold, and making sure you get the best CPM for each impression.
Launch Your FAST Channel With Confidence
The FAST market is rapidly growing, but it’s just getting started. With half a dozen major platforms, more than 500 unique channels, and billions of dollars of ad revenue, it has been an attractive market segment for a lot of players. By leveraging the value of your existing content library, and with the help of a few strategic partners, it’s easy to get started in this space and launch your own FAST channel to take your part of that heft revenue opportunity.
Harmonic continues to bring advanced, flexible solutions to the market that gives operators the power and confidence to grow their video business. You can ask us any of your questions about FAST channels, video delivery and distribution, or streaming services. Justlet us knowhow we can help you.
Robert Gambino is a Director of Solutions at Harmonic. He provides business development and strategic direction for Harmonic’s line of cloud native video solutions including media processing, origination, personalization, and monetization. Robert joined Harmonic after 17 years in telecom, running presales, architecture, and product strategy groups for operators and vendors in the video and ad tech spaces.