When Warner Bros Discovery CEO David Zaslav recently talked up FAST channels, calling them “a unique opportunity to increase our addressable market” (and possibly create a new home for HBO shows like Westworld), many people had the same reaction.
What’s a FAST channel again?
Short for “free, ad-supported television,” FAST is a live, linear and growing area of the streaming universe that has emerged as a complement to on-demand offerings. The multibillion-dollar sector is inhabited by an eclectic range of purveyors, content owners and connected-TV players, among them Pluto, Tubi, Roku, Amazon’s Fire TV and Freevee, Xumo, Local Now, Samsung, Vizio and Chicken Soup for the Soul Entertainment. With inclinations akin to Zaslav’s, cable TV programmers like AMC Networks, Hallmark and QVC have made moves in FAST. The maturation of the business in recent years has offered some consolation for media companies hit hard by pay-TV cord-cutting rates that now exceed 6% a year. Makers of smart TVs and other connected devices, meanwhile, are keen to participate in the shift of dollars from traditional platforms to streaming, hoping to use free streaming shows to secure long-term customer relationships.
Chief among FAST’s virtues, proponents say, is that for programmers and viewers alike it recalls the early days of cable, in all of its channel-surfing glory. Although the landscape is evolving, for now it is largely dominated by what used to be called reruns – proven audience magnets like procedural dramas and sitcoms, which can be packaged even down to the show or character level. (Cue the voice-over: “Tonight, on The Jersey Shore Channel …”)
“It’s very familiar – this is just TV,” Rob Holmes, head of content programming for The Roku Channel, told Deadline in an interview. “We just took streaming to a new platform and made it free.”
Differing Content Approaches
The Roku Channel, which launched in 2017, offers hundreds of FAST channels alongside tens of thousands of on-demand titles and has become a top 5 destination for Roku’s 65 million-plus active accounts. It started out focusing on genres like news and then branched out into entertainment, sports and other areas, becoming a key sandbox for the company as it set ambitious content goals and got into the originals game. With titles like this fall’s buzzy film Weird: The Al Yankovic Story plus offerings stemming from the acquisitions of Quibi and This Old House, Roku is taking a unique tack on FAST.
Most of Roku’s competitors are focused more on the opportunity to extend the shelf life – and revenue potential – of what’s already in their library or what can be acquired on the cheap. Regardless of content strategy, advertisers drawn to the targeting and automation capabilities of the internet have seemed game to invest in this new iteration of a tried-and-true, 70-year-old ad vehicle. S&P Global Market Intelligence recently estimated the U.S. FAST business is in the range of $4 billion in revenue this year and will more than double to almost $9 billion by 2026.
“Just like in the early days of cable, as this was all taking shape, a lot of people initially wondered, ‘Is anybody actually going to watch all this stuff that’s been around for all these years?’” said Alan Wolk, co-founder and lead analyst at media analyst firm TVREV. “It turns out, they do. People are comforted by being able to turn something on and find a show they have a connection to.” Roku’s Holmes points out that the company often comes across TikTok videos made by cord-nevers who have discovered they can flip on the Roku Channel without any up-front payment or hassle. “They feel like they’re getting away with something — ‘free TV!'” Holmes said with a laugh.
Wolk, who also wrote the 2015 streaming book Over the Top, is widely credited with coining the acronym FAST. A number of free streaming platforms had been running ads for years, among them Hulu and Crackle, by the time the streaming boom started to upend the media business in the 2010s. But the spate of live, 24/7 channels seemed like a new variation. “Everybody kept referring to these channels as AVOD, and we thought, ‘That’s really not quite it.’ So, we came up with something we thought was a more accurate description.”
Because of pay-TV commitments, many FAST players leverage established brands, but what ends up streaming is a curated version of a channel, not the same feed. Viewers of the NFL Channel, for example, shouldn’t expect the same in-season game broadcasts or studio breakdowns that NFL Network subscribers get via pay-TV. Pluto, which Viacom (now Paramount Global) acquired for $340 million in 2019) embraced the live broadcast ancestry of streaming by deploying an on-screen programming guide, a pay-TV fixture eventually replicated by other companies.
Jeff Shultz, Chief Strategy Officer and Chief Business Development Officer, Streaming at Paramount Global, was an advisor to a small startup called Pluto TV as it came out of beta in 2014. “Common knowledge was that Netflix was killing advertising,” Shultz said about the operating environment at the time. Pay-TV, which had delivered staggeringly high profit margins for decades, was just beginning its secular decline, while streaming remained almost by definition ad-free. Disney, NBCUniversal and other media companies were still cashing big checks in exchange for funneling films and TV series to Netflix, and were years away from getting into the streaming game at all, much less selling ads there.
While Pluto has prospered as part of Paramount Global, surpassing the $1 billion annual revenue milestone last year, Shultz told Deadline that only about one-quarter of its content comes from in-house suppliers. “It’s still a third-party service,” Shultz said, noting the more than 400 sources of programming. That said, Pluto has been positioned as a synergy tool, with free pop-up channels for Yellowstone or CBS or Showtime series enticing subscribers to the company’s subscription offerings.
“What works in FAST is a well-known franchise – a brand of some sort – that’s highly episodic, a procedural or a sitcom that’s available in very large volume,” Shultz said. The company’s channel dedicated to CSI was “No. 1 the day it launched and has been No. 1 ever since,” the exec noted. “It is the archetype, the perfect FAST channel.” A recent deal put a trove of additional properties from the CBS library – among them Matlock, Andy Griffith, Cheers and Frasier – on Pluto.
In contrast with Roku, which has indicated it is spending in the range of $1 billion a year on original and acquired content, Pluto has thus far foresworn original programming.
“Even in success, you’ve got 10 episodes” in a typical season of a series, Shultz reasoned. “In SVOD, a single movie or series could drive a subscriber acquisition or avoid a monthly churn, but the only objective in FAST is engagement.” Judy Justice, for example, is a recent addition to the Amazon Freevee lineup as an original strip, but for Pluto and Paramount the preferred strategy is to embrace the library. “We own the Judge Judy catalog,” Shultz said of the former CBS syndication mainstay. “That’s thousands and thousands of episodes. The idea of starting over and producing them when we have thousands” isn’t viable.
Still, Roku’s Holmes said all of this new growth, at a time when the conventional bundle keeps declining, makes him wonder, “Who’s going to be the TNT of FAST?” The longtime general-entertainment titan of the cable realm has minted billions for Turner and its many corporate parents over the years in large part by aggregating large-scale audiences and persuading distributors and advertisers to pay a premium for it. “We’ve seen that 24/7 channels dedicated to individual shows do well. We have clearly seen that viewers are interested in the space,” Holmes said. In the cable era, he continued, trailblazers like MTV, Nickelodeon, CNN and a few others paved the way before fragmentation made pay-TV packages bulge with hundreds of channels as the 21st century began. “In this case, we’re going the other way,” the exec observes. “There a leveling-up” that could favor whoever finds a way to attain scale.
Deloitte, in a report outlining the consulting firm’s predictions for media and technology companies in 2023, said that all major ad-free subscription services will have cheaper tiers with ads by next year. About half of the field, the company predicts, will also roll out FAST channels. (Disney, it’s worth noting, has been conspicuously quiet on the FAST front even as it has introduced ads to Disney+ and two-term CEO Bob Iger acknowledged that pay-TV is heading toward a cliff and is “going to be pushed off.”) NBCUniversal’s strategy with Peacock since the streaming service’s launch in 2020 has had FAST well in mind, and the company’s deal to carry Hallmark programming adds to a robust lineup of several dozen 24/7 channels spanning many genres. The Roku Channel, in a similar fashion, has recently added cable mainstays QVC and HSN to its free offerings, along with Lionsgate’s MovieSphere.
The Great Migration?
Are we witnessing the great migration, then, with dollars and eyeballs shifting from the old cable box and grid to a free and internet-delivered future? And if so, is that going to solve the problems plaguing the media sector, whose longtime pay-TV engine continues to sputter? “The answer is no,” Shultz said. “FAST is part of the answer. If a media company’s goal was to migrate out of the existing, highly attractive, highly lucrative linear model into a single-business-model linear, ad-supported model, that would be incredibly challenging. … There is this idea that this could be Cable 2.0. but people have to acknowledge how unattractive that business would be.”
Cable and satellite systems, Schultz notes, were able to profit via geographic monopolies. “The fact that there were artificial constraints on the number of providers that a household could have meant that content differentiation was less important,” he said. “There are only a couple of examples – DirecTV NFL Sunday Ticket – of distributors trying to differentiate themselves based on content. In almost every case, the portfolio was more or less the same. … There are no constraints on distribution now – anyone can become a distributor.”
Indeed, the marketplace is full of unlikely purveyors of lean-back video. Vevo, which was created as a joint venture among major music labels in the wake of Hulu’s initial launch, has seen a huge benefit from merely being in more living rooms. Connected-TV ad revenue now makes up 50% of the company’s total ad revenue, up from just 4% at the beginning of 2020.
Bill Rouhana, CEO of Chicken Soup for the Soul, recently led the company’s acquisition of Redbox, in part because of its FAST portfolio. But even though the company has funded originals for Crackle, Popcornflix and other services under its streaming tent, he doesn’t see a content spending race resembling that of SVOD. Some players in FAST are putting together content “really just to get the message across that you can watch stuff,” he said. Content spending “has proven time and time again to be the third rail.” While certainly drawn to many aspects of FAST, which fit well with his company’s on-demand portfolio, Rouhana says he also sees the market as a viewing and advertising experience “on the way toward something else.” The atomization of the video audience – made even more pronounced by the increasing irrelevance of measurement tools like Nielsen ratings in the streaming age – has taken “four networks” from the 1990s, in Rouhana’s assessment, and “turned it into 20,000. But where has the audience gone?”
For his part, though, Holmes sees all of the activity by FAST stakeholders in recent years as a fundamentally positive sign.
“They put a toe in the water,” he said, “and they’ve seen that the water is deep.”
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