How to create a winning FAST channel service

With successes like Pluto TV, Xumo, and Tubi, FAST (Free Ad-supported Streaming TV) has recently become a very intriguing area of the streaming sector. These services appeal to massive audiences, and it’s easy to see why. They offer free and easily accessible content at a time when a huge amount of subscription platforms compete for viewers, and budget spends have already reached threshold limits. At the same time, the ongoing global pandemic has increased demand for content and viewers are now unfussed about consuming ads during streaming as long as the service is free of cost. According to Deloitte, 47% of American consumers have tapped into FAST services since 2019.  In addition, TiVo’s latest trend report has shown that 81% of Americans prefer FAST subscriptions over another paid-for TV service.

A clear example of this trend is Netflix, which has recently opened up to adopting advertising as a supporting business model after its recent decline in subscriber numbers. FAST channels have been mentioned as a means for Netflix to gain reach and attract new subscribers.

AVOD, SVOD OR FAST?

During the last decade, there has been a boom in new subscription video on demand (SVOD) services such as HBO, Disney +, and Netflix, as well as advertising-based VOD (AVOD) services, such as Youtube, offering free on-demand content supported by ads.

Although FAST services are welcomed by audiences and represent a good source of income for content owners, the business model is not new. Ad-supported linear TV is an older concept with many of the first streaming TV services having been financed through advertising revenues since there has been a consumer resistance towards paying for things across the internet in the early days. FAST includes all sorts of online TV services that are ad-funded rather than subscription-based, including AVOD, as well as streamed traditional channels with ad breaks.

But there is a new, booming, and quicker way of reaching new audiences, as well as creating additional income for telcos and broadcasters: FAST Channel Services.

WHAT IS A FAST CHANNEL SERVICE?

The ongoing digital evolution has shifted audiences away from traditional TV services and towards a more defined and customized TV experience – audiences now want to use their time watching content that is truly interesting. However, at the same time, audiences get overwhelmed by all the content choices brought on by the vast number of on-demand services available. The majority of viewers is longing for an “old school, laid-back linear TV experience”, but with content targeted towards their interests. FAST channels may be the perfect answer to this.

The definition of a FAST channel varies depending on who you ask, but one common way to describe it is as: “a linear channel created for an online service, versus a standard broadcast channel just distributed online”.

The FAST channel concept allows you to create different TV channels with very specific content, addressing different interests and preferences, combining personalization capabilities and a user-friendly interface with an on-demand experience with features such as pause, fast-forward, or rewind. It offers ad-funded content for free with a linear channel “laid-back” streaming experience.

The channels are typically made up by VOD assets together with ad slots, which are later filled by personalized ads. You could, for example, create a theme-based channel, e.g. “The Swedish 1980s Movie Channel” where all content would be made up by Swedish movies from the 80s, or create channels with premium content that are directly competing with the more traditional channels.

FAST channels are not necessarily competing with premium SVOD. On the contrary, as the Netflix example shows, they might even compliment them as they can also be used by an SVOD service provider to drive viewers to their platform as a way to gain new paid subscribers.

7 BENEFITS OF A FAST CHANNEL SERVICE:

1. Increase monetization: Use existing libraries consisting of older assets to create a service that provides a higher value ad inventory. The CPM (cost per thousand impressions) for ads on a FAST channel is often around twice as high as the CPM for a linear channel, because the advertising can be targeted towards a highly segmented and well-defined audience.
2. Increase session duration: Having relevant content AND relevant advertising means there is a good chance the viewers will use the service more. Studies show that relevant advertising is less disturbing than non-relevant ads. So, relevant content and relevant ads is a good mix!
3. Facilitate upselling opportunities: Use FAST channels as a free cost-efficient service to drive reach and provide a user base to convert to subscription customers or upgrade to premium content.
4. A more engaging user interface: Use FAST channels to make the user interface and user experience livelier – engage with the viewer right away by auto-starting the FAST Channel directly when they access the service.
5. Easy to create, fast to launch: Use the VOD assets already available within the library to create FAST channels, grouping assets into linear channels.
6. Increase content ROI: Creating any niche or category channel oriented towards a specific audience offers a ‘second life’ to those assets that might not be easily found in the full catalogue and allows you to monetize your library of longtail content.
7. Reach new audiences: Some consumers are simply very tricky to reach with traditional TV, reluctant to use subscription services, or tired of navigating through endless content catalogues. FAST Channel services could help turn non-TV users into FAST Channel users if the content provided is of interest to them.

LET’S LOOK AT RELEVANT AREAS WE CAN ADRESS TO INCREASE PROFITABILITY

There are two ways to achieve or improve profitability: increase revenues, and/or lower costs. As we have seen, FAST channels are well suited to increasing revenues by attracting viewers and upping viewing time with targeted channels. This approach can significantly increase the value of the ad inventory, since advertisers are willing to pay much more for an ad that reaches a well-targeted audience. Plus, with more channels, there’s also more ad space to sell.

Then, what about costs? Creating a larger number of niche channels means that there’s a need to keep the cost per channel low to make the business case fly, even with a lower number of viewers per channel.

This has been the main factor limiting the number of channels per market and service historically. The number of viewers addressed defines the cost barrier for creating a channel. That’s why the US, with a TV market of some 350 million potential viewers, has had around 500 channels in the EPGs, while European countries with smaller population sizes have had significantly fewer.

HOW COULD YOU LOWER YOUR COSTS? 

If you would like to reduce overall costs, or find a low-cost FAST Channel Solution  without sacrificing the quality of your content, here are two things you should consider:

1. Reducing your encoder cost: The typical approach for creating online TV channels is to first curate the content and then transcode it into the different multi-bitrate OTT formats that are needed to reach all screens. However, this approach gets costly if you want to offer several different channels, since you will need to use one encoder per channel.So, how do you get around this? The solution is to generate FAST channels by stitching them together from content that is already encoded. Look for a VOD-to-live solution that supports channel creation within the multi-bitrate domain.
2. Automating the scheduling: The use of VOD-to-live technology for channel stitching is only half the story. Some type of scheduling mechanism is also required to take VOD assets from a library and place them on a pre-determined timeframe in order to generate an electronic program guide (EPG). Scheduling can be done manually, but to keep the costs down to a minimum, an automated workflow is important as well.

Do you want to find out how Agile Content can help you build a winning FAST channel service? Book a demo!