Free ad-supported streaming TV (FAST) services are growing rapidly. Today, hundreds of FAST channels exist, and a recent report from VIP+ found that the average large FAST studio took home $23.2 million in ad revenue by the end of the second year after launch.
FAST services and channels are trending globally for several key reasons. Over the last few years, the SVOD market has become fragmented, content rights owners and video service providers are looking for new revenue streams, and there is a massively underserved market of consumers who want to view personalized, compelling video content without subscribing to another SVOD service.
As video service providers look to connect with more consumers and monetize their content, launching a FAST channel is a great way to enhance direct-to-consumer digital reach and engagement. Anyone with an existing SVOD or AVOD content library can easily launch a FAST channel and start harvesting ad dollars.
As the market evolves, FAST channels are creating new revenue opportunities and driving subscriptions to premium content for video service providers.
The evolution of FAST Channels
The popularity of FAST channels is paving the way toward new developments and a superior streaming experience. In the next 12 months, FAST experiences will evolve, giving viewers access to more original content and sports. FAST platforms like Crackle are already ahead of the game in offering original, award-winning content.
Premium movies and live sports content will also soon be available on FAST services. Once premium movies and sports are offered by FAST, it will drive higher viewership and increased revenue, along with an explosion in FAST channels.
Another evolution underway for FAST channels is cross-platform or universal search and discovery and recommendations. One of the biggest challenges today with FAST channels and services is content discovery. Viewers need an easy, straightforward way to discover engaging content. Within the next two years, FAST platforms will start collaborating and making content more discoverable, resulting in skyrocketing viewership.
New business and revenue opportunities enabled by FAST
FAST channels can be both a source of ad revenue and a vehicle for driving subscriptions to more premium content. Data use is incredibly important for monetizing FAST channels. Leveraging user data, video service providers can deliver targeted ads to viewers, which not only boosts revenues but also makes streaming experiences more relevant and engaging for viewers.
Targeted ads attract about five to 10 times higher revenue than regular, non-targeted ads. In the U.S., the advertising rate for premium content is about $50 or $60 CPM, compared with single-digit CPMs for traditional broadcast ads. However, CPM is directly related to how much data is being used. Today, the amount of data being collected for FAST channels is very small, which is why most of today’s channels are under-monetized. Video service providers can improve FAST channel monetization by using metadata, such as the content title or video genre.
The next step in enhancing monetization for FAST channels is utilizing advanced metadata, such as scene information. Through advanced metadata, ads can be better targeted to viewers. Handling monetization in-house with a cloud video streaming platform is another effective strategy for improving FAST channel monetization.
Creating a balance between data and ad providers is critical to ensure proper protection and effective ad targeting. As standards evolve, this balancing act will be easier for video service providers.
FAST Channel Conclusion
FAST channels are expected to grow considerably in the future, expanding revenue opportunities for video service providers. Launching a FAST channel is simple and relatively low-risk for content owners and video service providers with an existing content library. However, the content must be compelling, and targeted advertising is a must.
Harmonic is leading the charge for FAST channels with advanced, flexible solutions that empower video service providers to increase their revenue. With a cloud-based solution such as Cloudie TV cloud streaming platform, video service providers can spin up a new FAST channel quickly, without investing CAPEX. the industry’s only convergent TV advertising platform, offers video service providers a complete solution for video streaming and monetization, including a variety of tools for targeted ad insertion, enabling video service providers to swiftly enter the FAST market and grow their business.