Is the FAST revolution approaching? 

The future of television and streaming has once again shifted with the rapid rise of FAST channels over the last few years, DTVE reports on the growing market and what it means for the TV industry.

The year 2022 has been challenging for the global media market, with pay TV platforms, SVOD streamers, free-to-air broadcasters and social networks trapped in an endless cycle of staff layoffs, service closures and belt-tightening. But one area seemingly oblivious to the pain is FAST, the snappy acronym for free ad-supported linear channels delivered via streaming. 

While other sectors are downgrading forecasts and sending out a steady stream of restructuring memos, advocates of FAST channel talk about “explosive” and “exponential’ growth. Almost every day, another swathe of channels is launched on leading platforms such as Pluto TV, Tubi, Roku, Samsung TV+ and Amazon Freevee. At time of writing, the number of channels in the world’s most advanced market, the US, numbers around 1500. 

The big question is ‘why now?’. FAST platforms, and the channels they carry, have been around for around eight years; but it’s only in 2021 and 2022 that the business has gone into over-drive. Pluto TV EVP and general manager Olivier Jollet has been banging the drum for FAST since the middle of the last decade, long before Paramount acquired the platform in 2019 for $340m. Today, Pluto TV has 72m monthly active users and generated $1bn in ad revenue across 2021. He cites a number of factors behind the FAST revolution: “One is the growing willingness among content owners to license to us. I remember how difficult that was in the early days, but now we have proved to the market that we can monetise content.” 

Others include increased smart TV penetration and a shift in the ad industry’s attitude to FAST. “Advertisers have realised FAST gives them the benefits of big screen viewing combined with the measurability of digital,” says Jollet. “When you factor in the rise of programmatic advertising, you can see why the FAST ecosystem has built up such momentum.” 

Improved reach and access to content has been reinforced by developments on the audience side, adds Srinivasan KA, co-founder of FAST channel facilitator Amagi, which works with the likes of Banijay and Fremantle. He says consumers are “exhausted by the cost and choices of subscription services. Increasingly, they are clamouring for ‘lean back’ viewing experiences.”  

Olivier Jollet

Added to all the above, says Jollet, is that the KPIs across most regions are uniformly positive. “We’re in 35 territories now and we’re finding that this ad-supported big screen business model is successful everywhere. We have 400 channels in the US, 150 in the UK and have just gone live in Canada with 117 – which is the biggest number we have ever had at launch.” 

Translating this claim into numbers, S&P Global Market Intelligence reckons the US FAST market generated $4bn in ad revenue this year, more than three times the total in 2020. Looking ahead to 2026, S&P Global expects that figure to rise to around $9 billion. 

Other markets are catching up too, says Maria Rua Aguete, senior research director, media and entertainment, at OMDIA. Speaking to DTVE, she said that she is expecting Connected TV ad revenue to rise from around $1.8bn in 2021 to just under $5bn by 2027. Of the latter total, she estimates FAST platforms like Amazon Freevee and Pluto TV will generate almost $2bn. 

This ad revenue opportunity is the key reason so many companies have become interested in FAST – but it also helps that the process of launching a channel is relatively straightforward. While there are various factors which improve a channel’s chances of success (discussed in a companion story), companies like Amagi, Wurl and Harmonic can help with the operational aspects of channel management. As for monetisation, channel operators can sell ad inventory themselves – but if that’s not in their wheelhouse the platforms will do it instead. 

So who has boarded the FAST Channel express? Well the current runners and riders come from a range of directions. On the platform side, the key players are generally backed by Hollywood majors (Pluto TV, Tubi, Xumo), big tech (Amazon freevee), smart TV manufacturers (Samsung TV+, LG Channels +, VIZIO WatchFree+) or disruptors (Roku, Rakuten).  

Content

But there are signs that this pool of players could expand further. In the UK, for example, legacy broadcaster ITV is launching its new ad-free streaming platform ITVX with 20 FAST channels on board. Explaining why, ITVX managing editor Craig Morris echoes the point about audiences wanting lean back content: “There is a need state for this kind of content. We’ve all experienced the doom scrolling of on-demand, so sometimes there is a desire for someone else to make the decision for you – to just offer you an easy linear offering.”

Craig Morris

At the same time, FAST is a natural fit for ITV, adds Morris. “We come from a linear ad-free tradition. We’re a commercial company that knows how to sell advertising.”

In the launch period, ITVX is offering a mix of genre channels, short term topical channels and single IP channels around in-house brands like Love Island and TOWIE. Morris says ITVX is unlikely to run to hundreds of FAST channels “for quality control reasons”, but he is expecting the service to ramp up its offering and is looking for third party alliances: “ITVX is partly about serving new audiences, so we do want to build some exciting new content partnerships that can be based around a revenue share model. For example, we’re partnering with a company called Anime Limited to bring some anime content onto the ITVX platform.” 

As for the channel side of the equation, the situation is even more dynamic. Here, traditional channel operators like AMC and A+E Networks have moved aggressively into the FAST space, as have companies such as Vevo and Little Dot that initially built their businesses via YouTube. Alongside these groups, there are channels created by the platforms themselves and channels devised by companies that come out of production and content distribution. 

Among the latter group is Banijay Rights, a producer/distributor with a content catalogue consisting of 146,000 hours. The company’s DTC publishing strategy is overseen by VP, digital, Shaun Keeble who says: “The fact that we have grown from three channels to 20 this year shows that we see FAST as an incremental growth opportunity for the business.” 

Banijay’s approach, says Keeble, has been to create a mix of broad-based genre channels and single IP services – utilising content that is in its third or fourth rights cycle. “In the US, for example, we have a Deal or No Deal channel,” he explains. “For comparison, we also have a UK channel called Horizons that is home to a number of scripted and entertainment shows.” 

Like his peers, Keeble foresees continued growth in the medium term “because of the increased hardware penetration and the fact that advertisers have become comfortable with the sector. The US is probably 2-3 years ahead on FAST, but we anticipate increased appetite for FAST channels in the UK, Germany, LatAM, Australia and Canada. Our 20 channels currently translates into around 60 distinct feeds and I expect that to continue to grow.” 

Rob Christensen, SVP of US sales and global distribution, at music video network Vevo says the notion of music videos on TV screens goes back to the birth of MTV. Explaining why his company decided to add FAST to its own distribution ecosystem, he says: “About four years ago, we noticed that more of our YouTube content was being consumed on a TV screen. It’s gone from about 10% to a third in recent years. This, combined with the rollout of smart TVs, persuaded us to look more deeply at FAST. What we saw was a great opportunity for a company like ours that has a huge library of borderless content, and constant supply of original production.” 

 Today Vevo has 148 channels in 13 markets, via 33 partners – a solid indicator that the company’s expansion into FAST is reaping rewards. Christensen says the company is already well-embedded in the US and UK but sees continental Europe, Latin America and Australia/NZ as additional growth opportunities. “Platforms really like working with us, because of the fresh assets we can introduce,” he explains. “We’re shooting around 1000 new piece of content a year from live performances to features with artists that we have helped discover.”  

Of course, growth in the size of the FAST cake doesn’t mean everyone currently playing in the space will get a slice. On the platform side, the US alone has around 20 platforms and there is a general expectation that Google/YouTube will start to make more of an aggressive move into FAST. Outside the US, it’s a similar story – with the added complexity that companies like ITV see an opportunity to integrate FAST into their AVOD offerings. Pluto TV’s Jollet doesn’t fear for his own platform, but he accepts some platform-side consolidation is likely. “The market is evolving fast, which is one reason why we have placed increased emphasis on partnerships.  In the Nordics, we have teamed up with Viaplay, which shut down its BVOD platform Viafree and integrated it into Pluto TV – so that we could build a free streaming destination together. It’s a similar story in Canada where we have partnered with Corus.”

Tiers

Still on the platform side, forecasts about FAST’s share of the overall ad revenue piece also need to factor in the new advertising tiers being launched by the likes of Netflix and Disney+. ITVX’s Morris isn’t unduly alarmed by this development for two reasons. Firstly, he says, the new SVOD/AVOD hybrids are limited to an extent by the fact they are still paid-for platforms – not free like ITVX. And, secondly, he sees their arrival more as a vindication of the shift towards digital TV advertising – rather than an existential competitive threat. 

The channel side, perhaps, is where there is more likely to be casualties – for a couple of reasons. Firstly, because even lean-back platforms will eventually decide they have enough channels. A3M International EVP strategic development Gary Woolf, whose company offers a range of single IP and genre-based services, says that is already starting to happen in the US “where platforms can afford to be selective.  They are looking at where there are gaps in their channel line-ups, but also churning out channels that aren’t doing the business.” 

Blue Ant Media president, global channels and media Jamie Schouela agrees: “The US is already a very frothy market. Some platforms there have 300-400 channels, so they can afford to be more picky. And there’s not as much white space to launch channels into. Increasingly, it’s going to be about whether you add value to the ecosystem. From our point of view, it means focusing our energies on a small, strong portfolio of brands. We’ll have seven channels in clear niches by early next year – but after that, we’ll probably take a breather.” 

 Vevo’s Christensen agrees: “I see massive upward growth in viewership and ad revenue, but I expect platforms will look at the number of channels they carry. That needs to be top of mind for content owners, which will have to work harder to put their best foot forward.” 

Jollet acknowledges the point, saying that “killing low performing channels is part of the job. To deliver a robust proposition to advertisers, we need channels with high engagement.” 

There is one interesting counter-argument to this point, says ITVX’s Morris, which is the notion that FAST channels might become more personalised as the sector matures. This envisages a more fragmented market where one household is receiving true crime and 1980s music channels while next door is receiving home improvement and Jazz. Technically this is feasible, though it does still imply a dilution in ad revenues for channel providers. 

The second point is yet to play out – but is likely to become more significant as the market becomes more mature. This concerns the platforms’ ambitions for their own channel brands. Pluto TV, for example, is home to both own-branded channels like Pluto Western and channels from within the Paramount family (eg MTV Dating). It’s a similar story at platforms like Samsung TV+, which has also launched its own suite of channels. Jollet says Pluto TV is “an open market” which works with 420 partners globally. But when FAST channel consolidation comes it’s unlikely that platforms will ditch their own services ahead of third parties. A more likely scenario is that owned and operated channels will start to secure a larger share of voice on platforms – with smaller IP owners reverting to a more traditional content licensing model (rather than attempting to run their own channels). 

In terms of other dynamics to watch out for – a lot will revolve around developments on the platform side. Three main areas stand out. Firstly, competition between the many FAST platforms will inevitably drive up the quality threshold – with channels perhaps expected to improve their content offering (originals, earlier windows) or introduce greater exclusivity.  

Secondly, studio-backed players will increasingly look for ways to leverage their capabilities to the benefit of all their platforms. Jollet, for example, describes how Pluto TV has carried a Paramount+ promotional channel – in a bid to showcase the SVOD platform to its users. He also explains how a Big Brother FAST channel was launched in LatAm, as a companion to a scheduled version of the show on free-to-air channel Telefe in Argentina. In other words, FAST can play a complementary strategic role as well as being an ad revenue generator.

Finally, there’s an issue around the relative significant of AVOD (on-demand) and FAST (linear). At MIPCOM, Tubi chief content officer Adam Lewinson expressed his belief that the future of TV is “free, ad-supported and VOD”. AVOD is where the Fox-owned platform is doubling down on original investment – echoing the story at ITVX. Lewinson’s prediction at the time was that AVOD will be a more significant opportunity than FAST Channels: “Younger demos who grew up on Netflix and YouTube are less likely to engage in FAST channels. Our view of the future is on-demand, but we’ve launched FAST channels for a subset of viewers.” If he’s right, then the current enthusiasm for FAST may fizzle out sooner than expected.