FAST vs. Linear TV: Part 1 - What Are The Real Differences?

FAST feels like a new name for Linear TV, just delivered over the internet, rather than involving DTT, cable, and IPTV networks. Perhaps this is why service providers and technology vendors are grappling with marketplace confusion about what FAST channels are and what they can be.

Are FAST channels AVOD playlists or linear editorially-managed channels? Are they only for pre-recorded content or also live content? While some clarifications are required, one thing is certain – FAST is quickly establishing its place in the media ecosystem.

Why FAST Confuses, Yet Inspires

The first reason for some confusion about FAST is that the basic concept of free ad-supported TV isn’t new, so what is all the hype about? It’s a reasonable question amongst industry veterans who have worked with linear TV for years. Wikipedia credits media analyst, Alan Wolk, with the first use of the term “FAST” in a 2019 predictions piece he wrote in December 2018 in which he referenced ROKU Channel and TubiTV as the success stories of 2018, which pointed to a demand for free ad-supported TV that would continue to grow. Alan was right, and in mid-2022, the US market could count well over 1400 FAST channels in the market. Given these channels are separate from the more than 1700 Linear TV channels in the USA, industry veterans should be able to take some comfort from the fact that there are certainly some important differences to justify the hype.

The second reason for confusion is that there are various ways to approach the creation of a FAST channel. Standardization (i.e., editorially programmed and scheduled) vs. personalization (user-defined or user-assisted content and scheduling) is the important subject to consider. The technical and operational implementation of these two models is very different, so what makes sense and what is even possible?

Despite the confusion, the FAST market is growing as evidenced by the rapid channel count growth of the last few years. According to Omdia, as of January 2023 there are over 1500 FAST channels in the US alone, annual revenue has grown 20x between 2019 and 2022 to reach approximately $4 billion, and the forecast is to triple revenues to over $12 billion by 2027. The US is the lead market for FAST. About 90% of today’s FAST revenue is estimated to be in the US alone, which is expected to be about 85% in the US by 2027, meaning that outside the US the FAST market should be worth about $1.6bn. This is predicted to mostly come from the UK, Canada, Germany, and Brazil, in this order. In the US, perhaps more than other developed media markets that are funded differently and that have not had such high levels of Pay-TV market penetration (see Figure 1), FAST is an exciting novelty. And while VOD services have driven the cord-cutting trend of the last 10 years, it will be interesting to see if FAST drives more cord-cutting in the next 10 years.

Figure 1: US Pay-TV Subscriptions – from 91% penetration in 2010 to 59% in 2022.

Figure 1: US Pay-TV Subscriptions – from 91% penetration in 2010 to 59% in 2022.

It comes as no surprise that the FAST revolution has taken off. Just as the VOD revolution tapped into our desire to watch what we want when we want, FAST taps into our desire to watch lean-back content for free with minimal effort.

Because of this natural fit with our interests, the commercial opportunity for FAST is high, especially for smaller content producers and publishers. As a rule, subscription models rely on customer-stickiness. If acquiring a subscriber costs $50, and the subscription is $10 per month, the subscriber needs to subscribe for 5 months to deliver a break-even result. If the subscriber binge-watches then cancels before 5 months are up, there is a financial loss. But with FAST services the focus becomes like Linear – make the content attractive and its free price tag will encourage consumers to keep watching the ads, which fuels the advertising revenue. Also, not only are eyeballs on the ads, but the value of a FAST ad spot is expected to be higher than average due to the specificity of the audience. LG Ads reported in mid-2022 that FAST channel ads were generally shorter, had more appeal as a result, and also reported that the Connected TV households tuning in to FAST channels have a higher-than-average household income. This is an attractive mix to make FAST a commercial success and serves as the inspiration for FAST services to grow.

The Differences Between FAST And Linear

In conversation with industry insiders, it is clear there is confusion about how to distinguish FAST from Linear. So, let’s try to clear this up.

A FAST channel can combine live and pre-recorded content, just like a linear channel. It has ads inserted into ad breaks, just like a linear channel. It is editorially managed, providing a programme schedule, just like linear channels. These are the fundamental similarities between FAST and Linear TV channels. After this, things get different in 4 primary ways.

  • Free – FAST is truly free content. Like logging into YouTube. Aside from the cost of connectivity and the device, which you would have anyway if you are an internet user, the content on FAST services is free. Some services, like Hulu, deliver FAST channels as part of a subscription service. But the concept of FAST is that it is free. There is no license fee to pay, as is paid in some countries to public service broadcasters, and there is no subscription to pay.
  • Streaming – FAST channels are streaming only, and that means OTT only. They are not Linear channels streamed through the broadcaster’s own application, such as BBC1 on BBC iPlayer or RAI Uno on RAI Play. Those channels are consistent with what you can find on all other viewing platforms, like Satellite, IPTV, CableTV and Free-to-air broadcasting. FAST channels are distinguishable from those channels by only being available through the internet-based platforms like Connected-TVs, Apps and Web-browsers.
  • “Niche” Linear – FAST channels have very focused content. For example, channels dedicated to Friends episodes, TED talks, or nature documentaries – there is a long list of channels with very specific content to appeal to very specific audiences. This is a level beyond what Linear can offer, primarily because of the lower cost of production and distribution that allows for experimentation.
  • Personalized - The simplification of internet-based content distribution opens the door for mass-personalization. Traditional linear channels require transponder capacity for distribution and must feature in some form of EPG (electronic programme guide) on a Pay-TV or free-to-air platform. This is a more expensive way to distribute content than to utilize cloud-based playout, origination, and delivery platforms that can be paid for largely based on viewer consumption. So rather than knowing that you need 1 million viewers to justify the long-term cost of linear distribution, a FAST channel could have a good ROI based on a much lower number of highly specific viewers.

As Juliet Gauthier, FAST Product Manager at RedBee Media, states, “FAST is a low friction way for a viewer to access content. There is no need to log in. From the audience’s point of view, it’s great. You get dozens or hundreds of channels for free. It’s quality content, in a linear streaming format that’s a bit unusual and interesting. It’s usually available alongside on demand libraries, so you have that option too. Even better, FAST finally brings the concept of casual channel hopping to the streaming world. It’s a more lean-back viewing style than on demand streaming, and we’re seeing that there’s definitely a place for that.”

Disrupting The Pay-TV Model

FAST has caused ripples and waves in the industry because, like SVOD services before it, FAST is disrupting the established Pay-TV models. It is worth repeating that the USA had 91% Pay-TV penetration in 2010, and after just over 10 years of SVOD that number is now 59%. Now that FAST has landed and quickly expanded, we are now looking at the next wave of disruption. It is not clear how fast Pay-TV subscriptions will continue to be cancelled, although each major Pay-TV operator in the US reports subscriber losses every quarter.

When we look at Europe, we see a less extreme view because the market share for Pay-TV has not historically been as high in the large European countries. That said, subscription OTT services have gained a large market share in a relatively short time. For example, the UK’s BARB reported for 2022 that 10% of all households have a Pay-TV subscription but no OTT subscriptions, 34% have a mixture of Pay-TV and OTT subscriptions, and 34% have at least one OTT subscription but no Pay-TV subscription. While these percentages may stay high over time – i.e., 78% of UK households have some form of subscription – the total household expenditure on media services could change significantly if FAST services take the place of Pay-TV services.

Time Will Tell

FAST has grown quickly, particularly in the USA where there is a clear value proposition for FAST channels over the established Pay-TV services. FAST has some clear differences when compared with Linear TV that suggest there will be a growing audience for FAST services. Where the FAST channels exist is an open question – will the leading media companies make them widely available on any platform, or will content remain king and require people to log in to the Content Provider’s own App to find the premium content that is produced on the biggest budgets? Time will tell.

Whichever version of the future you think is most likely, there are some key questions we have not yet answered. How does personalization of FAST content fit with the need to create viral content? How is live content factored into FAST channels? What is the outlook for monetizing FAST channels when compared with Linear channels? Part 2 of this article series will consider answers to these questions. For now at least, a relatively safe prediction to make is that the media and entertainment industry is unlikely to quickly turn on a dime towards only focusing on FAST channels instead of Linear, but it will invest in FAST as part of a blend of content delivery methods to best retain viewers’ interest.

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