The online video space is jam packed full of acronyms. A few well known ones that spring immediately to mind include OTT, SVoD, AVoD, CTV, IPTV, SSAI, SSP, and let’s not forget the latest addition, FAST (Free Ad-Supported Television).
Many will be familiar with the term FAST, or FAST channel, by now, given the constant barrage of mainly positive headlines this development has garnered over the past year or two. The reality, though, is more complex than the headlines suggest, especially if you’re not operating in a large, high ad revenue TV market. Our primary markets – South-East Asia and Oceania – are two cases in point.
What is a FAST channel?
FAST channels are, as the name suggests, free and funded by ads. They are delivered in a linear way via OTT services, utilising VoD assets and live content and, will have likely have on-screen graphical elements and an electronic programme guide.
Some might say, ‘Hang on, a FAST channel sounds quite similar to broadcast television, which is said to be declining’. In many ways, it’s hard to disagree with this sentiment. Essentially, yes, they do share similarities with traditional TV as they offer viewers the opportunity to watch linear content without the need to pay for a pay-TV service, be that cable or satellite delivered. Where they mainly differ is around monetisation, as they provide increased opportunities for advertisers to reach a broad range of specific target audiences.
Linear broadcast TV may have a main channel with a varied range of fresh content, at different times, each targeted at a different target audience, depending on the programme. This is somewhat limiting in terms of targeting, reach and monetisation. However, FAST channels have the ability to widen their net and create the opportunity to target specific audiences. Here’s how…
The SSAI model
With the cost and effort of adding extra channels relatively low, the opportunity arises to create individual channels, dedicated and monetised to target a specific interest, genre or show, and therefore audience. These may range from cooking, sitcoms, true crime, news to music, niche sports or major sporting events.
Re-runs, pre-owned, or previously aired content can be played and replayed on a continuous loop on a FAST channel. This keeps costs to a minimum, and therefore maximises ad revenue and ROI. Furthermore, every individual can be served targeted ads using SSAI (server-side ad insertion) technology. That’s how these services can be monetised and monetised well. This is where the value lies for advertisers, so getting it right is crucial.
The SSAI model works on a CPM basis (cost per thousand) with the channel owner receiving a fixed amount per thousand views. Generally, advertisers will pay quite a lot more for ads viewed on a connected TV rather than via an app or browser, as a larger screen suggests higher engagement and impact. So, the more connected TV viewers, the better for the channel owner.
The other main variable is geographic, with markets where ARPU (average revenue per user) is the highest – such as the US, UK, France and Germany – the more effectively the SSAI monetisation model for FAST channels will work. We are seeing this across the market. Advertisers/ad providers want eyeballs on their content, and they want those people to have money to spend. Target them via SSAI-supported FAST channels and there’s potentially a good model there.
Regional uptake
Across various regions, there are notable differences in projected FAST channel uptake, as indicated by recent figures from Statista. In Oceania (including Australia and New Zealand), the FAST market is projected to reach US$14.83 million in revenue in 2023, with an expected annual growth rate of 13.12 per cent (CAGR 2023-2027), leading to a projected market volume of US$24.28 million by 2027. The ARPU is projected to be US$1.94 in 2023.
Moving on to South-East Asia (countries including Indonesia, Malaysia, Philippines, Thailand, etc), the projected FAST market revenue for 2023 is US$75.50 million, with an expected annual growth rate of 12.91 per cent (CAGR 2023-2027), resulting in a projected market volume of US$122.70 million by 2027. The ARPU is projected to be US$0.95 in 2023.
When comparing these figures to the US FAST market, which is projected to reach $6.16 billion in revenue in 2023, with an ARPU of US$7.95 this year, it is evident that the numbers in Oceania and South-East Asia are relatively smaller.
It’s worth considering the population size of these regions, which impact the market volume. Additionally, content ownership for these channels poses its own challenges.
In our experience, customers in the primary markets we serve are more focused on AVoD/SVoD solutions and determining which monetisation strategies work best for them. As always, we are collaborating with our customers to help them achieve their goals.
