Why are OTT and FAST Channels growing so fast?

Posted on by Martin Whittaker

The key to success in building a OTT or FAST channel

The rise of OTT services and FAST channels looks set to see further continual growth in the coming years, but why?

Not only does OTT and FAST allow content distributors to enhance their direct connection to their customers, but they also allow the opportunity for greater engagement.

What Does OTT Mean?

OTT stands for Over-The-Top. It is a streaming service that delivers content through the internet to any compatible networked device, and because it is delivered over the internet it bypasses traditional broadcast, cable and satellite platforms.

OTT has fundamentally changed how content is accessed and viewed today. It has put the consumer at the heart, allowing them to decide how, when and where to consume the content they have a vested interest, unlike traditional TV viewing.

This freedom has allowed an ever growing, ever more connected population to dramatically change its viewing habits and has forced a change of mind-set on brands and businesses. Content providers have had to explore new avenues to expand (and keep) audience figures, re-evaluate and innovate monetisation opportunities, while providing accessible and gripping content.

What Does FAST Mean?

FAST stands for Free Ad-based Streaming Television and is a service that provides TV channels or streams that are generally free for viewers to watch without subscription. They don’t require specific hardware and are supported by the revenue brought in from advertising.

Unlike Advertising-based Video-On-Demand (AVOD), FAST supports live linear content, whether that’s a sports game, a news programme or a studio show. For some businesses, OTT and FAST platforms can be complementary to their subscription, broadcast and pay TV offerings, while for others it forms their primary distribution model.

Why Content Distributors Should Care?

OTT and FAST channels enable content distributors to broaden the reach of their branding and increase the exposure of their content library. Many content distributors, large and small, have been using their older libraries of content to build niche channels in an effort to penetrate the market, in some cases launching channels to coincide with major historical events, world affairs sport, or in other cases, launching channels focussed on something viewers are passionate about. It doesn’t matter what it is, a large back catalogue of baking shows or documentaries about sharks - if they have the content, content distributors are not letting it just let it sit there.

Content distributors are even creating OTT/FAST channels and utilizing their short form content, which is more commonly delivered to YouTube or Facebook Watch. By using platforms such as evertz.io Stream, they are able to create channels with speed and ease and in doing so they expand their portfolio of personalised channels.

Broadening the access of your content library is one thing - the next step is to capitalise on the opportunities. By using popular distribution platforms such as Pluto TV, Tubi, and Xumo, there is the potential to build a larger subscriber base. Enticing and enhancing the user experiences with more personalised content creates loyalty, grows a subscription base, increases revenue, and acts a conduit to other premium content subscriptions.

“76% of all viewing time is done on the big screen, versus Desktop (11%), Mobile (8%) or Tablet (5%)”

Connected Devices are Driving Growth

One of the key factors surrounding the growth of OTT and FAST services/channels, is due in no small part to the increase of SmartTVs and connected streaming devices that are available to individuals in any given household. The accessibility to devices such as Roku Players, Samsung SmartTVs and Chromecast (to name a few) means that these devices dominate viewing time. Conviva’s recent (Q4 2021) state of streaming report, estimated that 76% of all viewing time is done on a big screen, versus desktop (11%), mobile (8%) or tablet (5%).

Conviva State of Streaming Q4 2021

Source: Conviva State of Streaming Q4 2021

This figure is only going to continue to grow. At the time of publication, it was estimated by Strategy Analytics that 80% of North American households own at least one SmartTV, with 50% of all households worldwide expected to own a SmartTV by 2026. All TV manufacturers add SmartTV functionality as a standard feature, whether it’s something they built in-house or are partnering with a third party. The reason for this is so they can grab a slice of the monetisation opportunities they were not previously able to access.

FAST Services and vMVPDs

There are two main types of FAST services available.

Platform Agnostic: These are platforms that are available across multiple operating systems. Examples include Pluto TV, Roku and Xumo.

Platform Exclusive: These are platforms that are available on one operating system. Examples include LG, Samsung TV+ and Vizio Watchfree.

This also applies to OTT services. However, in most cases they are always platform agnostic, except in some cases where there’s channel differentiation, too. (i.e. Some channels are platform exclusives, some are shared among multiple platforms)

Multichannel video programming distributors, like YouTube TV and Sling TV, are also players in the FAST/OTT game, because they also distribute linear content. These platforms are also platform agnostic.

OTT/FAST and TV Manufacturers Collide

In some cases, platform agnostic providers have also partnered with TV manufacturers to become a platform exclusive provider. For example, Roku has partnered with TCL, Sharp, RCA, HiSense, Sanyo and Westinghouse to become the defacto platform.

This might be in addition to OTT services that work out deals with TV manufactures to become the pre-installed option on Smart devices.

Ad Insertion Revenue

Over recent years, I have been fortunate to have worked on a number of key projects for some of the leading companies with domestic US and International channels. Their goal? To push and create extra monetisation opportunities.

The innovation in monetising OTT and FAST channels has been a fundamental driver in their rapid growth. Monetisation projects like these are being driven by one major reason - Ad Insertion. Enabling downstream distributors the ability to insert their own advertisements on OTT and FAST platforms, and share the profits back to the content creator, has created more revenue for the channel owner.

The payoff for channel distributors is in the CPMs (cost per thousand impressions) - the amount you get paid per 1,000 ad views. Unlike a traditional cable channel, ad insertion on an OTT or FAST channel is always dynamic and typically targeted at a household or an individual at roughly $30 to $40 per 1,000 impressions. This means you can earn between $0.50 to $1.00 for every hour a consumer watches your OTT or FAST channel. Considering the average global video consumption increasing rapidly up, from five hours per day to seven and a half hours per day, an OTT/FAST channel can make more money in a month in advertising than offering an ad-free package.

Value doesn’t just come from your content. The real value comes as a result of OTT and FAST channels being deployed with minimal to zero upfront capital investment. The Holy Grail for broadcasters and content distributors has always been to distribute their content to any platform, anywhere in the world quickly and easily. Think about deploying in minutes rather than months or years.

Launching A Successful OTT or FAST Channel

The OTT and FAST channel market is continuing to grow exponentially. With billions of dollars of ad revenue, recent modelling by nScreenMedia predicted FAST channel providers will generate $4.1 billion USD in ad revenue by 2023. It is clearly an attractive market segment for a lot of players. The key to success is to use a trusted service like evertz.io Stream, which offers users all the features found in broadcast grade automation systems, including live inputs, video/audio mixing, captioning and full branding capabilities. Alongside this, there are defined setups for delivery of the channels to services like Roku, Samsung TV+, YouTube TV and Tubi. This pre-built functionality enables content owners to easily launch channels as part of their distribution strategy. Designed and built by the team behind Evertz’ Emmy® Award-winning playout technology, evertz.io Stream is fully user-configurable, which simplifies and streamlines the launching of new playout channels.

If you have a question, would like to set up a demonstration or arrange an evaluation, please get in touch: sales@evertz.com

Martin Whittaker
Technical Product Director