Thinking FAST? Think big

Are you a content owner? Depending which media market(s) you operate in the topic of 'FAST' may well be creating quite a bit of noise in your industry circles. Is the noise warranted? How should you, a content owner, be thinking about FAST? What follows are some observations informed in part from my time with Pluto TV and Paramount Global. These particular comments are likely most relevant to content owners.

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Dissecting the FAST opportunity

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If you're a content owner trying to decide on your approach to the FAST segment, you may very well be overwhelmed by the variables you must weigh, and the choices open to you. The areas you and your teams will be assessing will likely include the following:

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Geography

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You will have questions of geography - where, really, are there FAST markets emerging, and why? FAST is not, by any stretch, a geographically uniform opportunity in the way that, say, SVOD is. There are a necessary set of market characteristics that need to come together for a 'FAST' opportunity to emerge. Not all geographies have these.

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Revenue

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You'll probably be doing endless modelling on revenue potential - what is the actual revenue segment FAST services are chasing? How much is really incremental to media operators already active in the ad-funded content space? Is FAST really securing new spend into digital video, or is it raiding spend in other digital video 'pots'? Is it growing the pie, or slicing it differently? What effect will the arrival of ad tiers from Netflix and other SVODs have on the FAST / AVOD revenue opportunity? These some of the macro 'revenue potential' questions you're probably grappling with.

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You'll also be poring over 'micro', service-specific revenue potential questions relating to any single service's advertising setup. What is its sales model? Is it mixed in with a broader multi-media direct sell, including, for example, linear broadcast and BVOD? Does it have a programmatic component? Is it purely programmatic? Does it share inventory with platforms or content partners, and their respective sales houses? Does it capture first party data? Can it effectively avail its data to / segment its inventory for, advertisers????

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Consumer

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You'll no doubt be looking at all the main players and trying to gauge the different consumer propositions - is a service a FAST pure-play? Or it is an established BVOD with some FAST bolted on? Or is it mostly AVOD? Is it 'standalone'? Or is it tethered to a platform? You could argue the more 'mixed' the model (for example, BVOD + AVOD + FAST) the harder the proposition will be to 'land' with consumers. Equally, a proposition tethered to a platform is limited as to how satisfying it can be for a consumer, being constrained in its use cases / device availability. You'll have quickly realised that no one service is directly comparable to another. Which ones(s) is/are the best for you? ??

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Content

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Finally, you'll be having a very close look at the content proposition any FAST / AVOD platform has - what is the content mix? What is the genre mix, genre emphasis, unscripted vs scripted, high quality vs lower quality? What's the mix of recognised content titles vs more fringe / lower profile titles? What is the mix of exclusive vs non-exclusive? What 'window' does it primarily use? Any genuinely 'live' content? First run? Mainly library? Is the content packaged mainly into linear channels, or is it mainly VOD? What brands are used on the linear channels? How are media brands used vs title brands vs 'house brand' genre / thematic brands? How best will your content fit / standout in the mix?

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Evidently, there's quite a bit for you to synthesise into your FAST assessment. For the purposes of this post, I'm just going to focus on the fourth section from above - content proposition - so, please read on if that's of interest to you.

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FAST money for old rope?

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As a content owner, you could absolutely be forgiven for believing that FAST presents a route to (modest) riches for your older, middling-profile content that no longer garners meaningful linear consumption and is no longer an attractive licensing prospect. It seems to be a re-emergence of the notion of a "long tail" commercial opportunity, first popularised by Chris Anderson in 2004. FAST platforms purport to be aggregating new demand for older, less prominent shows.

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To an extent, this has been borne out - early (consumer) adopters of FAST services did - and still do - like the relative obscurity and nostalgia of some of the content populating FAST services. Also - services like Pluto TV are best-in-class at 'packaging' their content proposition, framing older content in a smart, fresh, and topical way. Pluto TV at its best does an artful job of bringing fun and liveliness back to older, but good, content. So, there is some truth in the notion that certain content that might have faded from the limelight can create for itself an encore of sorts on FAST.

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But if you look to the evolution of FAST in the US, you'll see FAST is eschewing the 'long tail' model. Recent analysis from Ampere Analysis 's Daniel Monaghan ("Analysing the rise of AVoD services in the US") shows that content propositions of the major FAST players - Pluto TV, Tubi and Roku - are rapidly evolving towards more exclusivity and much higher quality content (Tubi US has a huge volume of content, so its 'overall' quality is lower, but within that it now has a very high volume of high-quality shows). Why is this?

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FAST in the context of wider video consumption trends

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Let's switch from a 'platform' lens to a 'consumer' lens. If we continue with the hypothesis that FAST is in essence a 'long tail' offer (as above, this is no longer strictly true in the US, but it probably remains the prevailing view in the emerging Western European FAST markets, for example) the consumer question therefore is - are we really seeing signs that consumers are (re-)embracing the 'long tail' of long form video? Or at the very least - are we really seeing signs that today's consumers are attracted to (and consuming) a greater breadth and variety of content?

Enders Analysis in London recently published a report by Tom Harrington looking at current trends in long form video consumption ("Viewing is narrowing - Bigger shows, fewer hits"). Harrington's analysis, albeit focussed on the UK, determined that, despite the explosion of choice and the increased content output across the sector, long-form viewing is starting to coalesce around fewer programmes. “Counterintuitively”, Harrington observed, “the bulk of on-demand viewing is of fewer programmes than the bulk of live linear viewing”.

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The Enders report is quite striking. Long-form video viewing is coalescing around fewer, bigger shows. Not only that, but long-form video viewing is declining (even whilst video viewing is increasing). And on-demand streaming services are garnering greater share of long-form video viewing. There are many more excellent insights contained in the Enders report, but for this post, these insights are enough, because they perhaps suggest a contradiction in how the FAST model is understood, at least in Western European markets. How do you reconcile a consumer preference for fewer, bigger shows, with a category that is seemingly touting a consumer appetite for large volumes of older, undifferentiated content?

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From a FAST perspective, the conclusions of the Enders analysis are even more stark when read alongside a report from Ampere Analysis 's Rahul Patel published last month ("FAST Channels: 10 Key Trends") that offers a telling snapshot of US FAST services.

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Ampere's report reveals the average number of free FAST channels by service in the US (as of December 2022) was 231. Two hundred and thirty-one, averaged from Roku, Pluto TV, Xumo, Samsung, Tubi, Stirr and Peacock. Of the top four by volume of channels (Roku 372 channels, Pluto TV 348, Xumo 307, Samsung 304), only Pluto TV has more exclusive channels than non-exclusive channels (and by some margin - 66% of Pluto TV's channels are exclusive compared with 48% for Roku, 42% for Xumo and 40% for Samsung).

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The Ampere report also profiles the comparative mix of channels devoted to scripted vs unscripted genres. Pluto TV and Roku fare well, with an almost even balance of scripted v unscripted focus - but Samsung, Tubi and Stirr have more than three quarters of their channels focussed on unscripted content. Peacock's unscripted count is 87%.

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These figures - describing as they do a category of service that is high volume, undifferentiated and mid-quality - seem to be at odds with the notion that consumers are focussing their viewing time on fewer, bigger titles, don't you think???????

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FAST on the move in the US

These figures do, however, belie the true state of affairs for FAST and AVOD in the US.

The same Ampere reports show that Tubi added nearly 10,000 titles to its US library in the year to October 2022, with Vudu, Amazon Freevee and Pluto TV also significantly growing their US catalogues. A significant proportion of Tubi's title additions are exclusive to Tubi, and Tubi now has an impressively high level of exclusivity in its catalogue.

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Also, Tubi, Pluto and Amazon Freevee are pushing more deliberately into critically rated titles - between them they garner ~80% of the top 500 critically rated shows from the catalogues of US AVOD providers. In fact, according to Daniel Monaghan 's Ampere Analysis report, the 'average critical rating' of Pluto TV's catalogue in the US is starting to reach levels on a par with SVODs like Paramount+, Amazon Prime Video and Peacock, and already exceeds that of Discovery+.

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With deliberate and smart propositional shifts like these underway, Pluto TV and Tubi are positioning themselves very well to swim with the tide of consumer preference for watching fewer, bigger titles.

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So, is the FAST opportunity still legitimate?

Yes - absolutely it is. In the US, where the changing structure of the market post-2010 opened a gap that Pluto TV forged into with creativity and flair and where subsequently Tubi has shown great ambition and commitment, the FAST opportunity is undeniable. The legitimacy of the FAST / AVOD opportunity is why Fox has reportedly been receiving unsolicited offers of over $2 billion for Tubi.

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And whilst the market structures of Western European territories and Australia, for example, do not resemble the FAST-friendly market structures of the US, in many of those territories there are market changes that are creating definite commercial and consumer openings for FAST.

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The question for a content owner remains just how big of an incremental opportunity FAST is. Setting aside the myriad questions that surround the microeconomics of FAST, from a purely consumption / engagement point of view, FAST won't dodge the Pareto principle for long - bigger shows will command larger proportions of viewing. The biggest IP, leveraged into FAST astutely, should still garner the lion’s share of the commercial opportunity.

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Perhaps the bigger commercial opportunity FAST presents for content owners is the additional engagement, bolstered awareness and incremental social profile FAST platforms can create for your biggest IP. FAST, leveraged smartly by a content owner, can create another important profile building and profile maintenance engine for your IP, especially if your FAST platform of choice is a clever and creative curator and marketer of its service, like Pluto TV for example. Seen in this context, the direct commercial return could well be considered a bonus, secondary to the important contribution FAST makes to your IP’s overall profile, reaching as FAST does a harder to reach audience.

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The FAST path for content owners

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Given the consumer trends evidenced in the Enders report by Tom Harrington - which are UK trends, to be sure, but it's hard to imagine that they won't also be seen in other mature video markets soon - then FAST not only becomes an important commercial opportunity, but also a necessary means to harness extra consumer engagement for your largest titles.

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As Tom Harrington observes, "It is a scenario that has clear winners—playing to the advantage of those with ‘bigger’ IP and programming that is able to cut through with little marketing as it is already part of the public consciousness".

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You may be tempted to initially experiment with middling titles, or titles that aren’t widely in use elsewhere for which the commercial risk of cannibalised revenue is low / non-existent. You subsequently may be presented with underwhelming engagement and revenue from this approach and conclude, prematurely, that the FAST opportunity is a little bit overblown.

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Here are some questions for you, a content owner, to consider:

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1.??????Are you considering your biggest titles for FAST? If not, why not?

2.??????Have you formed a view on which FAST/AVOD platforms are going to deliver you the broadest benefit, beyond just money?

3.??????If you are concerned that your biggest IP is not that big, comparatively – are you thinking creatively about new ways to package it / brand it on FAST, to help it stand out in FAST’s crowded content mix?

4.??????Do you have a windowing strategy / framework to help you place your IP into FAST in a way the complements your other commercial windows and revenue lines?

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If you have big IP, find a way to leverage it on FAST. You know you need to work hard to keep your IP big, and putting your biggest IP into FAST (creatively, of course, and complementing your windowing/revenue framework) should be a part of your overall strategy – and you should see some money, too.

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Get ahead of the game and think big about FAST.?