In the early days of Over-The-Top (OTT) streaming, each major platform focused on developing its own innovative business model. We saw the SVOD model pioneered by Netflix and Hulu in 2006, YouTube emerge as the first large AVOD platform in the same year, and a few years later, Pluto TV launch the industry’s first FAST service.
Now that these business models have been proven in the video streaming marketplace, we’re starting to see individual platforms combine multiple business models to provide more flexible viewing experiences and lower cost subscription options for audiences.
A great example of merging OTT business models is the growing adoption and integration of on-demand content into FAST services, as well as the addition of FAST linear channels to traditionally AVOD services.
These integrated FAST/AVOD platforms, now sometimes called “free streaming platforms,” have rapidly increased both viewership and revenue over the past five years. They’re also creating some new challenges for content sellers who monetize their assets on FAST/AVOD platforms.
Keep reading to learn more about why FAST/AVOD are merging into a single business model, why that model is resonating so strongly with audiences, the impact on content licensing, and how content sellers can adapt.
Why are streaming platforms merging FAST and AVOD?
As the OTT streaming marketplace matures, platforms are still fighting to win subscribers, keep audiences engaged, and mitigate subscriber churn. In hopes of leapfrogging their competition, the most ambitious streaming companies are now integrating proven OTT business models and transforming their platforms into a one-stop-shop for streaming that can cater to a variety of audience interests and content watching preferences.
For ad-driven platforms like Tubi and Pluto TV, this increasingly means offering both on-demand and linear streaming options for viewers. In a recent interview, Tubi Chief Content Officer Adam Lewinson explained why Tubi decided to offer linear FAST channels on its AVOD platform:
“Tubi has always been an AVOD streamer, and, predominantly, we still are. VOD sees higher engagement because viewership is more intentional, but FAST is growing because it gives viewers optionality. Some viewers are looking for that basic, lean-back experience they’re used to in cable, and FAST channels can satisfy that in a streaming environment.” — Tubi CCO Adam Lewinson
Tubi began as an ad-based VOD platform in 2014 and only began to offer linear FAST programming in 2021. On the other hand, Pluto TV launched as a FAST platform in 2013 and was already offering VOD content as early as 2017. The trend towards merging FAST and AVOD is continuing to gather steam, with LG Channels Plus now offering ad-funded VOD content alongside its FAST channels, Samsung TV Plus expanding into AVOD, and YouTube running experiments with linear FAST channels early in 2023.
How are FAST/AVOD platforms winning the battle for audiences?
Now let’s take a look at how integrated FAST/AVOD platforms are competing for viewership in the streaming marketplace – and why they’re succeeding.
The glory days of SVOD are gone
In the early days of SVOD, platforms like Netflix and Hulu offered a lower-cost alternative to Pay TV that gave audiences more control over the viewing experience. But since then, SVOD subscription costs have increased while the content distribution market has become even more crowded and fractured.
Audiences now have more SVOD services than ever to choose from and spend an average of $48/month on streaming subscriptions – a number that 50% say is too much.
Now that SVOD is more expensive and viewers need numerous subscriptions to access all the content they want to watch, the overall SVOD experience just isn’t what it used to be. SVOD churn is now trending up and many of those leaving viewers are choosing free streaming options like AVOD/FAST.
FAST/AVOD platforms offer flexible viewing options
Exclusively AVOD platforms offer a more “lean-forward” viewing experience, empowering engaged audiences to watch the content they want when it’s convenient. However, unlimited access to thousands of titles can overwhelm viewers and make it hard to choose.
On the other hand, exclusive FAST platforms offer a “lean-back” linear viewing experience that’s easy and familiar to audiences but without the same on-demand experience.
Integrated FAST/AVOD platforms give viewers the flexibility to switch between on-demand and linear viewing experiences at the touch of a button. As a result, these platforms offer a more flexible viewer experience that’s adaptable to audiences based on their whims and preferences.
FAST/AVOD licensing deals are low risk, high reward
Another market advantage for merged FAST/AVOD platforms like Pluto TV and Tubi is that FAST/AVOD licensing deals are typically low-risk, high-reward for OTT platforms.
While SVODs often pay a flat fee or minimum guarantee to license content, AVOD/FAST licensing deals are typically based on ad revenue sharing between the content seller and the OTT platform. This type of licensing deal minimizes cost and risk for both the platform and the content seller, making it easier to source content that will keep audiences engaged and coming back for more.
Ad-based monetization = Low costs for subscribers
With SVOD subscription costs on the rise, audiences are searching for lower-cost streaming alternatives. This is exactly why so many SVOD services (including major players like Netflix, Peacock, and Hulu) now offer a lower-cost, ad-supported alternative to their subscription-based services.
When it comes to integrated FAST/AVOD platforms, ad-based monetization means that audiences can watch for free. Not only do audiences love the price, they also love the convenience: there’s typically no sign-up process and no need to login, so users can just open the service and start watching without having to manage (yet another) online account.
FAST enables VOD content discovery
In the same interview quoted above, Tubi CCO Adam Lewinson talked about how FAST is supporting Tubi’s engagement targets by helping viewers discover content they’re excited to watch:
“FAST is a great complement to VOD. FAST channels can also help solve for one of the biggest challenges in streaming from a viewer perspective, which is content discovery. If viewers happen to land themselves in the middle of an episode, there’s every opportunity to switch over to VOD and continue or restart that episode.” — Tubi CCO Adam Lewinson
Merging FAST and AVOD gives content sellers more licensing agreements and data to manage
When streaming services emerged, content sellers quickly realized that entering OTT distribution meant negotiating and managing more licensing agreements than they ever had before with traditional linear TV distribution.
Now, with individual OTT platforms leveraging multiple distribution models like FAST/AVOD, SVOD/AVOD, etc., content sellers can potentially have multiple licensing agreements with the same platforms: one for each distribution model.
More content licensing agreements means more challenges for content sellers:
- Managing license agreements at scale becomes more time-consuming, especially for content sellers who still depend on manual processes.
- Data normalization becomes more complicated and prone to error, especially given the non-standardized data sets content sellers typically receive from OTT distribution partners.
- Content sellers cannot easily achieve an aggregate view of their content performance, engagement, and revenue. When it takes longer to process the data, valuable insights are delayed, and content sellers are unable to make data-driven decisions.
Efficiently manage OTT content licensing at scale with Revedia Digital
Revedia Digital is a data intelligence platform that allows content sellers to automate aggregation and normalization of OTT platform data, streamline content licensing management and financial workflows, and accelerate insights into content performance, user engagement, and revenue performance.
With Revedia Digital, content sellers can overcome FAST/AVOD licensing challenges and efficiently manage OTT content licensing at scale.
Ready to learn more?
Watch our free on-demand webinar Growing AVOD and FAST Revenue to see the platform in action and discover how Revedia can help you optimize your content distribution strategy and earn more revenue from FAST and AVOD streaming.