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FAST Accelerator in Today’s Hybrid Monetization Era

With the need for revenue diversification rising, there has been an increase in the launch of newer FAST (free ad-supported streaming TV) channels globally.<br>Read More: https://www.sganalytics.com/whitepapers/fast-accelerator-in-todays-hybrid-monetization-era/

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FAST Accelerator in Today’s Hybrid Monetization Era

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  1. Media & Entertainment | Research & Analytics Services WHITEPAPER FAST Accelerator in Today’s Hybrid Monetization Era Unified PaaS to become the norm to improve margins and reduce the total cost of ownership (TCO)

  2. FAST Accelerator in Today’s Hybrid Monetization Era Overview In June 2022, TVision’s CTV survey highlighted that FAST (free ad-supported streaming TV) channels have an average household reach of 20% (e.g., Tubi and Roku with 18% and 22%, respectively) in the US. Although this is almost a third of overall household reach as compared to subscription video on demand (SVOD) services, there has been an exponential growth in new FAST channel launches in the past 24-36 months. Also, Variety estimated that in 2022, the FAST market would reach US$3.9bn at a year-on-year growth of 50%. The US will remain the biggest market, accounting for more than 90% of the total spend, followed by Western Europe, attributed to higher CPMs (cost per mile). Furthermore, as content fragmentation continues to rise, digital users’ preferences have drastically decreased the allocation of disposable income to paid entertainment services. Hence, the adoption of ad-supported monetization platforms (AVOD, FAST, etc.) is expected to increase globally. Subscription fatigue, lean experience, and hybrid monetization shift driving FAST adoption In the past 12-18 months, audiences are steadily shifting toward ad-supported monetization platforms from the traditional pay-TV and SVOD services in the US. The time spent on SVOD services in the US has sharply declined to less than 30% as compared to 46% across ad-supported platforms (as depicted in Figure 1). The SVOD landscape is reaching a saturation point along with continuously increasing cost of content and customer acquisition, leading to pressure on margins. This is gradually pushing a majority of content owners (including OTT platforms) to exploit hybrid monetization avenues; for example, Netflix and Disney+ launched their ad-tiered option in their respective leading markets in 2022. Figure 1: US Connected TV time spent by platform, 2022 46% 50% 40% 29% 30% 17% 20% 8% 10% 0% Ad Supported SVOD Mvpd Others Source: TVISION CTV Survey, and DTVE Europe (2022) 2

  3. FAST Accelerator in Today’s Hybrid Monetization Era Figure 2: A few recently launched FAST channels globally, 2022 Launch Period Addressable Market No of Channel Entertainment Segments Focussed Distribution Touch Points Brand Value Proposition Autentic and OneGate Media November 2022 1 (Adventure Earth United Kingdom Nature & Wildife Documentaries Samsung TV Samsung TV Plus, LG TV, Pluto TV, Rakuten TV and waipu.tv Music, Sports, and General Entertainment Niche action and outdoor sports centric positioning Mainstream Media October 2022 Germany 3 Shows included are American Road Trip, 30 Minute and Jamie’s Kitchen 1 (The Jamie Oliver Channel) October 2022 Freemantle United Kingdom Food & Culinary Samsung TV 200 hours of premium UK content Samsung TV Plus UK and LG Channels Banijay Rights (Horizons) September 2022 General Entertainment United Kingdom 1 (Horizon) Real wedding by film-makers Rakuten TV (VOD platform) Love Stories TV June 2022 Europe 1 Wedding Hyper localized channel ODMedia March 2022 Netherlands 1 (MojiTV) Children SamsungTV Plus Documentaries and video journalistic content repositories UK and Europe (43 countries) Rakuten TV (VOD platform) Guardian March 2022 1 Documentaries United Kingdom (initial launch), Germany, Italy, and rest of Europe in 2023 Hel’s Kitchen will showcase Gordon Ramsay styled episodes and shows 2 (Story Land, Hells Kitchen) Regional drama & US based food & culinary February 2022 ITV Studios Samsung TV Source: TVISION CTV Survey, and DTVE Europe (2022) As the need for revenue diversification continues to rise for most content owners, there has been an exponential increase in the launch of newer FAST channels, globally. Although the US dominates the number of new FAST channels launched in the past 18-24 months (i.e., 1,400 across 22 TV content aggregators), lately UK (Banijay Rights, ITV Studios), Western Europe (Mainstream Media, ODMedia), and Latin America (Euronews, TelevisaUnivision) penetration (Figure 2). This is predominantly attributed to the quadra tiered value proposition of FAST channels: • It assists brand and digital marketing agencies to expand their targeted ad inventory. For example, the average 30-second ad attention span on PlutoTV is exponentially rising to 10.2 seconds in the US. Distribution platforms such as Samsung, LG, etc. are building a strong dual revenue stream centric to the ad revenue mix, and connected TV sales. For example, Vizio generated US$200mn in revenue while Samsung has pre-embedded default FAST channel remote experience with their 2022 smart TV sets. Audiences have access to mid-tiered premium content entertainment, culinary, etc.) at no additional subscription or one-time fees. In 2022, Roku, Tubi, and PlutoTV had a combined share of close to 7.5% of the time spent on connected TV apps in the US. • have been witnessing strong • • Niche and thematic (food, healthcare, short- form entertainment) TV & video owners can boost their reach and audience engagement beyond their social media platforms (YouTube, Facebook, Instagram, etc.). For example, Amogo Networx launched its FAST channel diversifying from its flagship YouTube presence in April 2022. repositories (sports, news, general 3

  4. FAST Accelerator in Today’s Hybrid Monetization Era Profitability, reach, and faster time to market (TTM) push toward a unified FAST hub as a Service FAST channel technology procurement strategy is primarily based on the following two key factors: Although tier-I content owners are still following the best technology procurement roadmap, converged offering is fast becoming the new norm. Furthermore, as faster TTM is pivotal for content owners in this highly fragmented space, technology vendors with pre-configured and automated workflows are witnessing a higher adoption curve. A few examples include the following: • The nascent market dynamics resulting into leveraging repositories for channel origination Rise in competitive pressure on securing partnership with tier-I distribution platforms such as Samsung, Roku, LG, PlutoTV, etc. to enhance MAUs (monthly active users). video-on-demand (VOD) asset • • Amagi’s (news, sports, etc.) along with tightly orchestrated scheduling Fastchannels.TV’s orchestrated revenue split deployment model MuxIP’s in-built QC validation (60+ checks) along with automated real-time ingest, transcode, and multi-screen distribution capabilities. pre-packaged live plug-in support • unified workflow with an As safeguarding TCO and generating significant revenue stream via expanding reach is crucial for attaining a sustainable competitive edge in this space, content owners are slowly but gradually moving toward a unified FAST hub as a service (i.e., end-to-end workflows from acquisition, contribution, production, distribution, monetization to engagement). • Finally, as the FAST segment rapidly evolves toward building newer engagement touch points such as bundling of channels for Hispanic audiences, original programming investments, etc., technology lead differentiation will be crucial for both content owners and distribution platforms to carve a niche long-tail value proposition. 4

  5. FAST Accelerator in Today’s Hybrid Monetization Era About the Author KEDAR MOHITE • Vice President (Media ICT Consulting) Kedar Mohite heads Media & Entertainment ICT research & consulting practice at SGAnalytics. He has been Principal Consultant with Omdia (Ovum) focusing on media & broadcast technology arena for over a decade. His area of focus includes media technology and ICT service developments across broadcasters, digital service providers, sports franchises, OTT, publishing, and enterprise video segments. Kedar is a regular speaker at IBC, NAB, and vendor-sponsored industry conferences, and his work has been cited by the BBC, Wired UK, IBC.org, and Business Wire. He holds a Master of Science in Business Administration degree from the Norwegian School of Management BI. Disclaimer This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by SG Analytics (SGA) and is not intended to represent or get commercially benefited from it or imply the existence of an association between SGA and the lawful owners of such trademarks. Information regarding third-party products, services, and organizations was obtained from publicly available sources, and SGA cannot confirm the accuracy or reliability of such sources or information. Its inclusion does not imply an endorsement by or of any third party. Copyright © 2023 SG Analytics Pvt. Ltd. www.sganalytics.com GET IN TOUCH Pune | Hyderabad | Bengaluru | London | Zurich | New York | Seattle | San Francisco | Austin | Toronto 5

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