The Media Ad Sales Council (MASC), founded by Matrix, has placed a magnifying glass on how free ad-supported television, or “FAST” channels, impacts local broadcasters. “To help ease the process, MASC is sharing wisdom from executives who are on the front lines during this time of mass FAST channel proliferation,” it shares in this thought piece presented by the MASC.
Life in The FAST Lane
Free, Ad-supported Streaming TV (FAST) channels are flourishing with no sign of slowing down. With the potential to reach new audiences and usher in new partnerships, life in the FAST lane holds promise for broadcasters but will most benefit those equipped to navigate the complex array of nuances that accompany this rapidly evolving business.
The data paints a salient picture. New metrics from research firm TVREV project that by 2025 the ad spend on FAST channels will surpass that of cable, broadcast or subscription-based services and reach $33.7 billion, or 35% of total ad spend, a significant leap from the 17% earmarked for FAST this year. Additionally, the average consumer uses more than 11 video services, with ad-supported apps quickly eclipsing their subscription-based counterparts, according to TiVo.
The FAST environment is impacting local broadcasters in a variety of ways. For many, it is a matter of when, not if, they wade into the water. While consolidation inevitably looms down the line, the time is now to make decisions. To help ease the process, MASC is sharing wisdom from executives who are on the front lines during this time of mass FAST channel proliferation.
To market, to market
The FAST market has given rise to two different business models. On one hand are the aggregators curating a sea of content—both general-interest and niche—to offer consumers. On the other are companies that are looking to take their own existing programming and turn it into hyper-focused FAST channels.
“You’ve got a variety of content owners and distributors who have a broad swath of content, and they are now creating dedicated FAST channels to hone in on specific audiences,” says Michael Barbetta, Senior Director of Revenue and Strategy at The E.W. Scripps Company. “Naturally, you are going to have to see consolidation because of the amount of clutter and confusion that is going to be created in the near term. But I would say right now we are finding content providers throwing as much as they can against the wall to see what will stick.”
The programming proposition
Like all businesses rooted in viewing preferences, the success of any given FAST channel—whether a broadcaster is opting to launch an O&O app or partner and provide content to an aggregator looking to deepen audience relationships around news, entertainment, and sports—largely rests on the content offering. In this climate, which means both quality and quantity.
Keeping the pipelines filled to satisfy the current voracious viewing appetite is no small task. “Because the world has been trained for fragmented viewing, the hard part with this model is can content providers sustain enough content profitably?” says Barbetta. “As we can see, it is costly for Netflix to do this. With FAST channels, it is going to require more than news to be successful. The educational side is covered; we need the entertainment side. If you look at our company, for example we have aggressively acquired Bounce, ION, and other quality content to position ourselves for the future. You see Nexstar doing it with CW. We have invested in shows on some of the networks we own, including reality shows because is becoming a more economical choice for viewers. Nontraditional distribution channels are just as important as content.”
Live sports are unsurprisingly emerging as a big driver. As the reign of regional sports networks dwindles, the prospect of sports leagues spinning off their own FAST channels is rising. Barbetta points to Major League Baseball as a prime example of the changing tide. “If they invest in keeping their content, they will struggle with reaching bigger audiences. That is important when you look at the fragmentation and people starting to collaborate,” he said. “Can Major League Baseball put out its own app and isolate its viewership? It is going to need options like us, and that is also a huge opportunity for broadcasters to be able to support that growing viewership.”
As the FAST marketplace evolves, the question of whether local broadcasters should be more unified in their adoption of the model is gaining traction, though there are no simple answers. While broadcasters often consider each other as their greatest competitors, most in the industry agree that in this environment it is the tech companies that pose the greatest threat. The opportunity for local stations to sideline the infighting and come in as a more unified team holds promise.
Barbetta comments, “It is a little bit of a double-edged sword when you look at some of these models like Amazon and Roku. The more everyone migrates to them, the more you are back in a Google situation where there’s total dominance of one platform occupying all the content. That is the tricky part here. We know that multitudes of platforms will cause too much fragmentation and viewership quality is not good. But I do think there needs to be unification, something that is going to give broadcasters an equal playing field. What we cannot afford to do is empower these groups to make it a one-sided benefit.”
Restrictions and Privacy
While the FCC governs broadcasters across a multitude of distribution avenues, no one is governing the other players in the FAST marketplace. Many believe the time is right for a level-set that would enable broadcasters more freedom to build their FAST business.
“I would not be surprised if in the next couple of elections this continues to be an important topic,” Barbetta says. Alluding to the ongoing dissemination of false or unchecked information on social platforms including Twitter and Facebook, he adds, “It is a scary abuse of power in all directions. That is not how local news was founded or how we operate, but we are lumped in it now.”
The Media Ad Sales Council (MASC) is founded by Matrix Solutions CEO Mark Gorman and President Brenda Hetrick.
The MASC is comprised of the following members:
- Becky Meyer, SVP, National Sales, Gray Television
- Peter Jones, Head of Local Sales/Director, Strategic Partnerships, Premion
- Melanie Webb, Vice President, Sales Operations, TEGNA
- Joe Lampert, Senior Program Manager, CNOmniMedia
- Jenn Scilabro, SVP Digital Sales, Nexstar
- Michael Barbetta, Senior Director, Revenue & Strategy, E.W. Scripps
- Al Lustgarten, SVP Technology and Information Services, Hearst Television
- Michael Spiesman, VP Sales & Marketing, Allen Media Broadcasting
