As The Evolution of FAST revealed, FAST channels and platforms are growing exponentially – forcing services to adapt their strategies to focus on discoverability and viewership figures.
As each FAST service looks to distinguish its offering, market jostling is set to significantly impact content owners/distributors. To improve the odds of licensing content with the best ROI, owners/distributors should take note of these emerging trends to best speak to platform needs. And in doing so, benefit from increased bargaining power when licensing content.
In this Part 2 of the Future of FAST, we look at:
- How FAST services are prioritizing new, diverse ways of attracting viewers as competition increases – and how this impacts content owners/distributors
- What changes in the way FAST services approach content curation means for content owners/distributors
- How content owners/distributors can increase discoverability on FAST platforms
How the battle for discoverability affects FAST services
With competition between FAST platforms now fierce, content programming and partnerships have become a high-stakes game. Over the coming year, expect services to get stricter about the content programmed as they attempt to maximize viewer engagement. Content owners/distributors will need to be savvy about market fit and carefully address the needs of FAST services to ensure the best ROI.
As competition increases, FAST services look to prioritize new, diverse ways of attracting viewers. Providers like PlutoTV have begun reorganizing channel categories to improve searchability and highlight particular channels. AMG is also looking to future technological possibilities, with “eyes set on personalized [FAST] channels." Platforms are leaning towards creating and surfacing channels that they believe will attract and retain the most viewers, focussing on how to hook viewers from their very first watch and pursuing strategies for addressing new untapped audience demographics.
Expect decisions around content licensing and placement to remain data-led: after all, each platform only has so much space. Smart TVs are already contributing to the rise in FAST data sophistication. Original equipment manufacturers like LG branching out into streaming have benefitted from a significant data advantage, with automatic content recognition (ACR) data providing precise insights into what people like to watch. “That has allowed us to pick and choose the type of content we want to put in front of users," says Raghu Kodige, President of LG Ads Solutions. "That amount of data doesn't really exist with anybody else and it's given us the ability to experiment too with the type of linear channels we put up."
Aside from data-led decisions, expect unique differentiators - think first runs, exclusives, or originals - to receive the best visibility and treatment. “These types of stunts, exclusives, originals, they’re key to drive and get attention in a very crowded space,” says Scott Maddux, VP of Global Content Strategy at Xperi.
The impact on content owners/distributors
As platforms attempt to differentiate, content exclusivity is increasingly top of mind. Platforms like PlutoTV, owned by behemoth Paramount, benefit from symbiotic relationships with their producer parents. “There’s an internal partnership between both linear and streaming programming and marketing teams across Paramount," explains Jeff Shultz, Chief Strategy Officer and Chief Business Development Officer of Streaming at Paramount. "For our streaming and premium pay TV services … we have dedicated channels like Paramount + Picks, Showtime Selects, BET Pluto TV and even single-series channels devoted to properties like Star Trek where we sample new episodes from current seasons and run marathon-style programming of select past episodes and seasons to promote our paid subscription services.”
How can independent content owners/distributors compete with such a strategy? Well, innovation in licensing agreements can go both ways. It shouldn't just be Paramount capitalizing on the buzz of first distribution rights, the demand for exclusivity, and the long-tail revenue potential of shared window contracts.
Exclusive distribution windows help channel curators build the distinctive appeal of their offering compared to every other horror or terror channel. Yet exclusivity has to be weighed against the constant need for high-quality content – and there are significant incentives for low content repeatability. Like any good business, diversification is crucial. FAST services looking to maximize revenue and efficiency will want to acquire a mixture of exclusive and shared-window rights.
Naturally, for content owners/distributors, exclusivity should mean a considerably higher price. And also - with the awareness that FAST services at different stages of maturity, with different niches or audience sizes, will offer distinct pros, cons, and licensing terms. With this in mind, content owners/distributors should consider what adding limited-window exclusivity licenses into the mix could do for their ROI. Once in place, a continued evaluation can reveal whether further exclusivity contracts make sense or whether a shared-window contract would command better revenue after a time.
Advertisers look to viewer engagement trends when deciding to partner with a platform. As a result, popularity with viewers is now everything, and curators are vitally aware of the need to maximize channel performance and the length of viewing sessions.
Between Q3 2020 and Q1 2022 services saw a huge increase in user watch time: Peacock saw growth of 1339%, and Roku Channel, Tubi, and Pluto all gained upwards of 300% (Variety). But competition is at odds with the appeal of the FAST model. “If we're doing our jobs right then you will find a channel that aligns with your interest, whether that is a comedy channel or a movie channel or a home improvement channel, and it will just pull you in,” says PlutoTV co-founder Tom Ryan.
Faced with a proliferation of options (there are now over 20 FAST services in the US) audiences are likely to opt for well-curated channels with expertly-tailored programming. And content that improves audience watch times and platform reputation will see huge demand.
The impact on content owners/distributors
Content owners/distributors can increase their bargaining power amid rising competition by being aware of this curatorial importance. Services recognize the unique opportunity FAST has to cater to specific, niche audiences with expertly-curated channels (such as PlutoTV Terror and Impact Wrestling).
Content owners/distributors that can evidence a high degree of engagement or appeal with specific demographics or interest groups - whether through the initial cult appeal of content, its suitability for a particular genre or channel, or by building audience interest on a dedicated self-hosted site and then making the switch to FAST - will be in the strongest position. "Embracing specialization and FAST is the key to maximizing the value of legacy content" for both FAST platforms and content owners/distributors, explains Fred Santarpia for Variety.
Consider, also, the pros and cons of working with a big platform such as Roku or Tubi vs. a niche long-tail provider that appeals uniquely to a specific target audience. Among SVOD providers, niche platforms added subscribers twice as quickly as major outlets in 2021. For specific niches such as sports, news, or horror, dedicated outlets can sometimes offer particularly fervent audiences. This can lead to a better licensing deal and front-and-center treatment of content once it's on the platform. It (quite literally) pays to do the upfront research.
How content owners/distributors can increase discoverability on FAST platforms
With hooking and retaining viewers of such importance for continued longevity, the channels each service prioritizes will become crucial. FAST services are likely to prioritize channels with exclusive content and wide appeal upon opening - much like on a traditional TV setup.
Of course, for content owners/distributors, this channel positioning holds vital importance. It'll be hard to compete with the appeal of originals and studio partnerships for the very top spaces.
What can owners/distributors do to ensure success? FAST curators will be looking for particular qualities in licensed content, and having them will improve content discoverability:
- Evidence of specific or niche appeal: Curators have a keen eye for content that resonates with their particular audience. Specificity is also great for advertiser relationships: services can offer their marketing partners better audience insights and greater targeting, and nab a piece of the $25 billion that marketers are on track to spend on advertising-supported video by 2025.
- Content following trends: As FAST looks to take on traditional TV, content in the entertainment category, such as food, recipe, and home renovation shows, is performing well. In 2021, this channel type had the greatest increase, alongside movies and sport (Amagi). Look for a subsequent increase in demand for this content type from FAST providers.
- Low repeatability: Curators look for low-to-no content repeats across a channel on any given day: 74% of the content that airs on Pluto TV in a day is first-run (Variety). Expect demand to skyrocket for shows with large numbers of episodes or catalogs offering vast quantities of any one genre or theme.
- High-quality content: Content formatted correctly (with subtitles, the correct resolution, and dubbing options) reduces the need for costly service-side quality assurance. Anticipate high formatting expectations becoming the norm and reduced value for content that doesn't meet said requirements.
- Trusted content partners: It’s easier for channel curators to source new content licenses from owners/distributors they have worked with before and can trust to meet service requirements. Those who move fast and build relationships before being crowded out can expect a high return on investment.
- The Originality of approach: The introduction of YouTube shorts to smart TVs points to the continued integration between social media and streaming. Owners/distributors that innovate with social content could get ahead: in the US, 20% of Gen Z, 30% of Millennials, and 21% of Gen X rate short-form video content ‘very’ or ‘somewhat’ important (Statista).
A consistently strong back catalog remains a crucial requirement for FAST service success, so there will always be demand for licensing high-quality content. With annual U.S. FAST ad revenue estimated to increase by $2 billion between 2022 and 2025, if content owners/distributors can match platform requirements, they’ll be in an ideal position to negotiate licensing terms and windows to achieve healthy ROI. Content from trusted partners, with low repeatability and long-tail demand, will continue to receive interest despite market crowding.
An AI tool like Papercup can help you meet platform dubbing requirements and increase your distribution possibilities. As part of our localization package, we have established working relationships with various channel curators around the world that content owners and distributors can begin utilizing today. Speak to our team to learn more.