Is Free Ad-Supported TV (FAST) the Future?
The growth in FAST has been tremendous, we're told, because who doesn't like free content with no commitments and no catches. But since most FAST services don't publish their revenue, and subscriber numbers are not audited or substantiated, it's hard to get a sense of how they are really going. Here's a few adjacent measurements.
Conviva reports that Q1 2022 ad impressions and attempts were up 18% over the previous quarter, and viewing time has gone up 10% year-over-year. Variety pegs the number of U.S. FAST services providers at 20 (with 1,000 channels) growing soon to 21. A PWC report saw streaming increased by almost 75% in 2020 and the amount of subscribers doubled to ~ 250 million viewers in the U.S. and half of those also/or do AVOD viewing. And an nScreenMedia report says "The average FAST monthly active user is streaming channels for between 10 and 15 minutes per day."
The upshot is that ad-supported streaming seems to be growing, but that growth may be slower than, well, advertised. Realistically, FAST and AVOD should fall under the same category, since the business model is the same—FAST is really more of a delivery format than anything else. Since it's still early in the FAST lifecycle, there are a number of things channel owners and solutions providers should focus on to ensure this particular format persists:
- User experience
- Personalized EPG's
- Deep linking
- Targeted advertising
"The discovery minutes [in streaming have] kept on increasing over the last three years from two minutes to almost 45 minutes," Shikha Arora, founder and CEO of MAZ Systems. "Let's say I have one hour to view something and I spend the first 30 or 40 minutes trying to figure out what should I watch in the traditional VOD OTT app world. Then here comes FAST, which looks more familiar."
"The [EPG] guide has worked really well for people for a very long period of time," says Trent Wheeler senior vice president, product management, Gracenote. "It's comfortable, it's relaxing, it's easy to use. Whether or not viewers notice that it's a broadcast or a streaming channel [likely doesn't matter to viewers]." What does matter is gaining access to content.
"The average consumer spends 5 hours per day watching TV," says Wheeler. That seems like a large number and in this case, FAST services are going to need to improve to win market share. The challenge or pleasure about FAST is no one really knows what's coming up. It's a very curated environment. When PWC asked about what makes a streaming service attractive, the top response, 55% said because it was easy to use. This was a survey of people who use streaming services. Not FAST, just streaming. So we can assume that continual improvement of the user experience is something to strive for.
With a few services, it's almost as if someone went over to the UX department when they were having a few beers late Friday, and asked, 'Could you design a bit of an interface? Nothing special. Don't spend a lot of time on it, it just needs to work. We're not sure anyone will be using this, so we don't want to put too much money into it.
The Power of Free
It's hard to beat free. "Our customers consistently told us they were looking for free movies," says Chris Yates, general manager, on demand, Redbox. Viewers want to watch something that's a little less taxing to find, choose and, watch. Essentially FAST doesn't generate the kind of buyer's remorse you might get by picking the wrong thing to watch on a pay-per-view or SVOD service. FAST services are really replicating the old TV experience of free programmed content. "It's a behavior that everyone knows from the cable days."
As the Redbox EPG (electronic programming guide) shows, FAST simulates the lean-back, channel-surfing experience many viewers are familiar with from pay TV.
Redbox has 20 years' of data (from their 40-million-strong customer base) to provide insight into customer viewing patterns. This data told them that viewers consider weekends the time to watch new release. "FAST was a really good step for us to make, because it provided another occasion [for viewing]," says Yates. "It's something that people might do on the weekend, but they also are going to do it during the week as well."
"I still appreciate the lean-back experience and I think news, for example, is a perfect match for the FAST services. I see all the news companies moving into becoming part of the FAST services," Magnus Svensson, VP sales and business development, Eyevinn Technology.
Recommendations are what drive viewing. On Redbox the top uses of their service, Free Live TV, are live events like news and binge watching. "Watch time is really high," Yates says, though the company won't share numbers. "People come back much more regularly. We have over 100 FAST channels. At a certain point that choice can almost become too much. The problem is not making your catalog smaller, it's how do I improve those discovery points where you don't have to surf around for 20 minutes to find what you want to watch." There have been a number of strategies here. Grouping by topic seem to be the most common approach.
"Search is always kind of secondary to browse. Within Prime, everybody's home screen is completely different. It's based on what you've previously watched," says Chris Bassolino, co-founder and COO, Zype. "When you're browsing, you're getting an experience tailored to you. Why wouldn't linear streams be similar in the fact that they have all the data?"
If viewers would rather browse than search, the browsability navigation needs to be top notch. "I believe FAST has taken off because the discoverability is very, very high for users," says Arora. "As more and more people are moving towards FAST, the place is going to become cluttered very soon."
"A trend that I see is embedding AI inside FAST to create a personalized electronic programming guide experience for users." This is entirely probable considering streaming is providing a lot of information about the viewer and this real time feedback could influence how EPGs in the future are created. "Just by the nature of the delivery mechanism, which is over the internet, there's a lot of interesting data available about the user," she says.
The challenge, however, is TV manufacturers. "I believe it's the TV manufacturers who are the gatekeepers," says Bassolino. "The smart TV has elevated to the point where it is now the primary interface for people watching content."
As smart TVs become the main landing point for consumers to stream, app development from the many FAST and other services need to be sure to be able to deep link and create navigation to work both within the TV's OS environment as well as with each brand's particular design and product guidelines.
"You could deep link into apps in all major TV OS, but the exact way to do that differs slightly between the systems," says Svensson. "So a FAST or other service needs to create their service/app in each of the system they want to operate (AndroidTV, AppleTV, Roku, FireTV, Samsung, LG, …) and from there deep link into each app that runs on that TV OS environment."
The idea that you can supersize services is alive and well in streaming. Wurl ran a targeted promotional campaign on FAST channels earlier last year. "We have access to inventory and we have access to conversion measurement," say Yuval Fisher, the company's VP of Technology. "What we did with machine learning is we ran a test where we gathered 25 of our of our channels and created a promo for their content." They used AI/ML to identify those viewers they predicted would become active viewers of additional channel (and they were looking for incremental views, not cannibalizing existing viewing numbers). They looked at things like engagement times, channel changing, content type, and a lot of other things they either didn't want to mention, or was only identified by the AI/ML.
"We didn't cross promote channels that were in the same genre because we are not interested in having somebody who is watching, say one food channel, go to another food channel." After 4 months of running their ad campaign they found a 20% daily viewing increase for each channel. Consumers went from viewing 1.8 channels to 5.3. Return on ad spend accord to Wurl was 4x.
One of the amazing things about streaming is that overall the amount of ads being served can be much lower than broadcast TV if you choose the right service. In Canada there's a TV show called ‘This Hour Has 22 Minutes. The title was based on the amount of content broadcast in a half hour period. Now, there's not a required number of minutes, it's fairly fluid.
Peacock promises the lower ad load for FAST at 5 minutes, leaving 55 minutes of programming. "If you have too many ads, people will churn. The tolerance is lower, so the ad load by inference needs to be lower," says Yates. "But then also the ads need to be better." Redbox does approximately 8 to 10 minutes per hour for its ad load, says Yates.
"From an advertiser standpoint, they want to be able to reach those potentially hard to reach eyeballs in an ad supported environment," says Bill Condon, senior VP advertising partnership, Xumo. "Obviously streaming is growing significantly, but you have a very large portion of users that are going into the Netflix environment and [other subscription services]."
The ad inventory has become very valuable to reach cord cutters. "It's really interesting to see a lot of these traditional broadcast television companies are embracing FAST distribution," says Condon. "TV's not going away. It's just shifting in terms of where consumers are watching it. They're still watching TV, but they're watching it from a streaming standpoint."
As viewership has shifted, it makes inventory more valuable. "According to a Kantar research study, we did last year about 44% of our audience are cord cutters," he says.
"Programmatic is driving a significant amount of our revenue where folks want to come in and they want to buy on audience, or they're bringing their own data to layer on that," says Condon. "We're also seeing a significant increase in folks that want to come in and buy us from a programmatic guaranteed standpoint."
If advanced ads with greater CPMs are the future, FAST platforms could end up being a very good bet. Condon says Xumo is still mostly selling 15s and 30s. "There's been a ton more demand. So actually we're not actually seeing prices go down."
Of course, all app owners would prefer you come to their property, but the challenge is you likely won't go search them out unless they are a very well-known brand. "We don't believe that the Redbox experience can only be one that you receive inside our app," says Yates. "We syndicate our Redbox channels outside of our app."
"You're putting together these FAST channels and you have a lot more flexibility than you do in, say, traditional broadcast," says Yates. "We syndicate to the Roku Channel, Vizio WatchFree+ and LG as well. Actually where we're looking to increase syndication alongside those platforms."
Programming FAST channels is really only constrained by licensing deals. For viewers, however finding content is tied to metadata. If I'm running Nadine TV Movies as a FAST service, where I only show movies which start with the letter N, the key thing is getting the rights for the content and using standardized metadata so my content can be surfaced. This is important to both small and large services alike to integrated into the TV discovery platforms.
Where Did I Leave That Content?
"That linear channel can be the point of discovery for the application so the users can find [more] content. Let's say I'm watching an episode, but it's in a linear channel," says Arora. "I can then go and access the other episodic content that exists within the app." While this seems a bit clunky, it would depend on the implementation.
We're also left with potentially the same content coming from various services, but it may be uniquely curated and wrapped in a better UX on one than on another. Whether streaming services are distributing on TV FAST services, like Xumo or Redbox running on LG, or their apps have negotiated placement within the TV's OS, it will still come down to content being found.
"I think where content discovery should optimally live is at the platform level, because they've got the broadest user base," says Wheeler. The challenge is even if there is a cross distribution search on a particular platform, consumers may continue to use more than one device. The biggest bang for consumers would be a search that works across everything. Says one consumer, "I hardly ever use my LG's FAST EPG. Every once in a while, I go to it out of boredom or curiosity. But I usually go right to an app. And I have Hulu Live, so I can access live TV that way."
FAST programming mirrors how we previously watched TV. It's easy and predictable, but now each viewer is leaving digital breadcrumbs about their viewing habits. There is the opportunity to capture and examine viewing data, which makes the FAST format almost like a test environment. Companies can put content out and see what works, especially since viewers don't really know what to expect when they click on a FAST channel. "There's still definitely an opportunity for better usage and understanding of data," says Wheeler.
Is this just a fad? If FAST as a segment is not enveloped or branded differently in a few years, improving on everything we listed is going to be very important. Instead of hoping your customers will come if you build it, now you need to play nice with a bunch of TV manufacturers and be sure that you make the best of their environments as well as all the other end points.
Many companies likely feel they have a new frenemy to negotiate with. "I think streaming distributors are coming around to realizing what will happen if TV manufacturer starts to sell their TVs for a hundred bucks and then that the rest is subsidized by ads. It's almost inevitable," says one of the experts interviewed here (they didn't want me to quote them directly). So one side votes for the TV manufacturers becoming the new cable company, while the other side says content distributors will now start to have more negotiating power.
"I think the TV manufacturers are getting too high a share of revenue compared to the owners. I think that will shift back because now suddenly there'll be more FAST services," says Svensson. "In the beginning, I think it was the sort of long tail content that was on the fast services. Now it's getting to be more and more premium." And we all know, premium content does not come cheap.
Regardless of which side of the above argument you're on, focusing on the user experience is key. The user experience is what's really important, and as more companies offer FAST, all they're really doing is programming curated content which a viewer can come into at any point, that is free to watch and ad supported. The biggest challenge is helping viewers find content. If I was running a FAST channel, I would absolutely focus on this. The rest of it seems like throwing wet noodles at the wall and seeing if they stick.
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