Kapang bends the FAST business model to accommodate premium broadcasters

Free ad-funded Streaming Television, commonly known as FAST, has evolved over the past few years, with platforms such as Pluto and Redbox generating millions of dollars in ad revenues, monetising archived content, and generating much-needed cash from their video libraries.  

Today, FAST and Linear Streaming TV are not appreciated as a replacement for cable packages, as it fails to meet the content-grade expectations of traditional and subscription services.   

View TV has relaunched its Kapang service with a business model that supports existing broadcasters’ business models and costs. It also provides critical services such as DMA channel listings, addressable advertising, and a consistent interface across all platforms. 

A channel can be launched on Kapang within several days without software development fees, third-party supplier contracts, or hardware, providing a 300% revenue uplift compared to other FAST approaches.

Streaming TV & with traditional broadcaster brands?

The existing problem with Streaming TV is not related to technical scalability or internet quality; Netflix and Disney+ have proven the delivery with their current services delivering to >100m households daily.  The issues for traditional & premium content broadcasters transforming to Streaming TV are solely related to the business models and the complex barriers to entry across platforms.

Traditionally, a cable/satellite channel would be distributed to platforms. They would typically pay to build the channel, be paid a minimum revenue, a split of the subscription revenues, or earn a high percentage, if not all, of the ad break revenues based on Nielsen data recorded across 120 million homes across the USA.

The channel would receive more than 75% viewer ad & subscription dollars, totalling millions of pounds per week used to pay employees, technology, and offices, pay back and reinvest in premium, innovative content to retain and grow audiences. 

Can Streaming TV and FAST deliver broadcaster revenue models?

Any Streaming Broadcaster, “The Channel”, manages five key stakeholders to create, deliver and monetise a channel consisting of brand specific,

  1. The Technology Partner:                                  e.g., View TV, Amagi, Wurl, AWS
  • The Consumer Platform:                                  e.g., Samsung Plus, Pluto TV & Kapang etc
  • The Ad Agency/Advertiser:                              e.g., Coca-Cola, Ford, McDonald’s etc
  • The Content Owner/Producer:                        e.g., Create In-house, commission or acquire
  • Branding & Marketing Agency,                        e.g., Google Ads to Clear Channel

The correct mix of spend and costs across the five stakeholders will grow and retain channel audiences across platforms, monetising via subscription, advertising revenues or a hybrid of both.

The current FAST model operated by many channels earns less than 25% of every advertiser dollar, less than one-third of the revenue, compared with the traditional broadcast model. 

The low earnings are directly related to high revenue shares by each digital stakeholder and fees demanded across Platforms and Technology suppliers. The other stakeholders require the same budgets as before, as their role has remained the same, making the transition financially unviable.

The lack of branded broadcasters across FAST & Streaming TV platforms has failed to drive many audiences to cut the cord on linear television services. However, Pluto TV is demonstrating ad revenues exceeding $1b per annum; we expect this to be ten times larger if it contains the top 20 national US channels. 

The audiences want the core channel line-up with an extended line-up of niche and vertical content channels supporting AVOD and SVOD content libraries.    Think Netflix mixed with cable TV packages available on a single app.

Live sports and premium content brands such as Show Time and HBO have the highest mountain to climb to justify their model on Streaming TV platforms. Most have opted to produce an in-house service to skip FAST & Subscription revenue shares, but they wanted to be something other than a platform business.

The menagerie of apps across broadcasters has resulted in users having to download apps per channel without everything being on a single EPG line-up via a single service.  A single service would provide ease of use for consumers and efficiencies across all broadcasters.

How do FAST Channels make money?

Many FAST platforms and FAST channel broadcasters spotted an opportunity to rebroadcast archived videos and social media content across various platforms generating additional money from a previously justified content production or acquisition.   

This approach allows the FAST Broadcasters to generate extra cash, $100k – $1m/annum, which is a bonus to their original deals, which already justified the content spend.  Other services produce low-budget content with a similar approach to YouTube creators or social media influencers who have <1% of the costs and overheads of the traditional broadcast.

Consumers have been enjoying FAST delivering nostalgic content for general viewing. Still, they need to see it as a viable option to replace their HBO-grade services; therefore, a tiny percentage engage regularly with existing FAST services compared to traditional platforms.

YouTube Creators trade on their AVOD services

The YouTube creator world has exploded.   Google purchased YouTube for more than $1.6 billion and has grown to a platform delivering 1b global viewing hours per day, with one of its top creators, Mr Beast, valuing his single channel at $1.1 billion.

With more than 50m YouTube channels on offer across the platform and 60 hours of content being uploaded every minute, getting to the top of the search results is a scientific and costly process which surpasses the effort and cost of SEO on google or getting to the top of an app store.

Mr Beast stated that he spends an average of $650k per video, with more than $10k spent solely on each video preview picture supported by an extensive full-time social media team informing fans across the platforms. Still, one of his primary revenue streams is video sponsorship, not AVOD advertising.   He uses video sponsorship as 100% justification for creating the content and the advertising as the profitability, so there is little risk.

At $9.5cpm on the best YouTube Creator videos, that is less than half of the advertising-based revenues that can be generated using FAST & Streaming TV. YouTube takes 49% of these earnings for providing the monetisation service and community platform with zero costs.

The average television series can cost between $500k and $10m per episode, with The Crown on Netflix commanding the highest spend.  The Crown would require more than one billion views per episode on YouTube to be profitable, a tall order, whilst Youtube would make an unfair $8m per episode.

Youtube is a powerful platform for influencers and niche content production businesses because it is free to use via a revenue share model. Still, as primary content providers, broadcasters require a structured environment with maximum returns. YouTube would need to be fairer and tighter for corporates looking to control their brand and maximise the returns on their innovative content creations, but they do not have to and will not change.

What is the FAST & Streaming TV solution for Broadcasters?

View TV, an original content creator and now a multi-channel broadcaster, could not see how quality Live News, Live Sports and Premium Content channels would be commercially justified on FAST platforms, so it ironically decided to build its virtual cable platform, Broadcaster YouTube, Kapang.

Kapang works using the same principle as cable and satellite services with set-top boxes mixed with the cross-platform ease of use of YouTube. Consumers can download the Virtual set-top apps across PCs, Laptops, Mobile Phones, and Tablet PCs or directly downloadable onto a Smart TV.  The service delivers FAST monetised linear television, premium subscriber channels,  ad-funded on-demand video and premium subscription or pay-per-view live events.    

The team at View TV spent time reviewing the business model required for channel owners to engage and appreciate Kapang.   View TV was focused on providing a fair and sustainable revenue model, closely replicating the returns and features broadcasters have used via traditional distribution models whilst supporting minimal change to their business.

How does Kapang solve the problems?

View TV via Kapang solves many problems for traditional free-to-air broadcasters looking to migrate their business to Streaming TV without reinventing their existing business model.  Streaming TV should add additional benefits through reporting and interactivity and require minimal change within their operations teams.

Most existing broadcasters can be on Kapang quickly by placing an additional distribution encoder in their broadcast centre and sending 20mbps resilient feeds back to Kapang central or via multi-feed SRT for digitally enabled businesses. 

Once the feed is on the network with Kapang, “BroadcastCDN”, all the monitoring, distribution to third-party platforms, ad-trading, and ad insertion is carried out using their single managed team, which charges the entire service on an OPEX-based SaaS model for minimal risk and zero capital investment.

Channel operators receive 100% of the adverting revenues.

All channel operators receive 100% of the channel revenues from the Kapang Connected TV Ad Marketplace, with Kapang simply charging Opex fees for delivering the channel, advertising, and platform services.    This was a crucial part of the content sustainability required by the project to align traditional broadcasters and premium content creators with Streaming TV & FAST.

The technical fees from Kapang are based on usage, and this depends on ad break frequencies and channel video quality. Still, the optimal model costs less than 25% of revenues for a single solution that generates >$0.40/hour watched, three times higher than other platforms and four times higher than YouTube.

With Kapang, channels do not need to run app teams, market independent apps or understand CDN delivery; they all hand off precisely the same way they always have via a distribution encoder from their existing playout solution or playout provider.

Target Audience Figures:

UK Households =     27m x 90 hours per month = 29.1b hours/annum = $12.2b/year

USA Households =   121m x 91 hours per month = 132.1b hours/annum = $55.5b/year

What are the limitations of Kapang?

Kapang is a hybrid Cable and IPTV solution that provides a FAST and cost-effective solution to broadcasters of all sizes; due to the SaaS-based Opex model, channels pay on success with their zero CAPEX model, yet all of the channels are regulated and controlled for a maximised viewer experience, a cross channel campaign environment for advertisers and an efficient delivery solution for channels that can go live within several days and watched by thousands of existing users.

The subscription and pay-per-view event business models provide a click-and-delivery solution for any broadcaster.  These additional models deliver services at the speed of social media platforms, are comfortable with the compliance of cable service, receive maximum returns on content investments and can invest more energy in entertaining audiences.

Kapang has key partners for playout, encoding and distribution, enabling channels to feature on other OTT and FAST platforms with the same secure revenue model with no additional fixed distribution fees to get a larger captive audience.

KAPANG USA has DMA channel options for limiting Local TV and Local licensed channels to households within a particular area; KAPANG DMA is also a service that advertising agencies can use to deliver advertising to traditional broadcast areas and provide town and city-based ad targeting for hyper-local or multi-asset campaigns.

KAPANG UK has country and town-based targeting, with Local Television services prioritising based on the user’s home address mimicking the traditional television regions used for the UK over-the-air broadcasting network.

How do I get launched on Kapang?

Kapang has 900 channel availability within 14 preset genres; Kapang does not queue channels onto the platform as a CTV or FAST Platform content aggregator would; if channel owners are paying the fees, they can have a channel today.  

As soon as the live feed has been received and checked, the channel can be scheduled to launch within a few days.  

View TV can provide a self-service or a managed playout scheduler if you do not have an existing live service.  We can build and launch a channel from your content portfolio, all subsidised due to the confidence in their results.

The costs are the same for all sizes of broadcasters and are between $0.05 and $0.14/hour broadcasted, depending on the service level required, which is a fraction of the $0.40/hour available earnings.

e.g., 10m hours of television watched per annum could generate $4m channel revenues with costs of less than $1m with no capital investment or software development, approx. 75% Gross Revenues.

Log on now to https://kapang.com/launch-a-fast-channel/

Kapang Broadcasters
FAST Channel Distribution from View TV

FAST Broadcaster Editor

Delivering the best of FAST Industry Insights via my ghost writer followers making sure that content owners are looked after in the greedy world of FAST.

Dedicated to the the FAST industry roll out, watch what happens next.

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