How LG Uses Data To Stand Up The FAST Channels Users Want Most
The latest in a series of Innovator Spotlights from our Special Report, FASTs Are The New Cable
“From a consumer POV, user experience is our key advantage,” explains Raghu Kodige, CEO of LG Ads Solutions. “You have the FAST channels integrated into the operating system as well as the remote. We even make sure that if viewers have terrestrial network channels they like that those are intermingled with our FAST channels. So you can literally take your remote and click channel up, channel down and you have all your linear and streaming channels integrated in one place.”
Alan Wolk (AW): What are some advantages that LG Channels has as an OEM?
Raghu Kodige (RK): We didn't try to reinvent how people should experience TV, we just took the things they were very familiar with and then introduced a better way of experiencing TV that also included our FAST channels.
The other advantage we have as OEMs is that through ACR, we know what people like to watch on linear TV. And that has allowed us to pick and choose the type of content we know users are interested in. No one other than OEMs has that amount of data since we can combine linear and streaming viewing patterns. That has led to the creation of new theme based channels. So if you want to watch Hell's Kitchen all day long, there is a channel for that. And we can experiment too, to see which channels work. We’re not tied down the way traditional linear channels are.
AW: How do FASTs and FAST channels differ from traditional cable and cable channels?
RK: There’s a lot of investment that goes into creating a traditional cable channel. Once you get past that, and all the tech infrastructure that is necessary to get it up and running, you still need to go to the individual cable operators and cut a carriage deal.
Whereas with LG Channels, we can just say “CSI is very popular with our users right now, let’s create a CSI channel.” And we can stand that up very quickly and then measure how it does. We can play around with moving it up and down in the channel guide to see if that significantly increases viewership.
All that is only possible if you have access to the equipment, which in this case is the TV, because then you have access to the data through ACR and to the operating system itself.
On a macro level, that means we have many more entry points into the content than a traditional cable network would because we can personalize that content. We can make a CSI-only channel or a crime channel or specific type of crime channel, and then we can test all of them to see which ones resonate best and which viewers they resonate with.
AW: Why do you think that linear channels have become so popular on the FASTs?
RK: People have always used TV as a leanback experience. They don’t want to have to think about it a lot. When you go to Netflix or one of the other SVOD services these days you can easily spend twenty or thirty minutes just trying to find something to watch and you’re often not sure what type of show you’re getting.
Whereas with linear channels, you can see right away—is this a channel about crime shows? Great, because I like crime shows. And it has a lot of shows I know I like. So I can immediately make a decision on what to watch rather than spend time trying to find a single series on SVOD.
AW: Measurement remains a huge issue with streaming in general and the FASTs in particular. What do you think the solution is?
RK: That is the million dollar question. People talk about how walled gardens are the issue and we've done our best not to create yet another walled garden. We work with a range of leading industry measurement companies and make our ACR data available to them.
But taking a step back, we feel strongly that we shouldn't be the ones grading our own homework. The industry needs to have reputable third-party measurement companies doing the measurement for us because that is how you create trust.
AW: Do you think that FASTs will become the dominant business model globally?
RK: I think it will become the dominant model and that there are two factors driving that. One is that the number of SVOD services being launched makes it harder for people to afford them all. Because it’s no longer just Netflix and one other service and you’re good to go. You now have to constantly change services because the popular program that you wanted to watch is not on a service you currently subscribe to.
Outside the U.S., that becomes an even bigger issue because most people do not have the resources to pay for multiple subscription services. That’s why even Netflix is launching an ad-free model.
But even then, the cost of those ad-supported subscription services is going to add up. So people are going to be looking for free and that is why FAST services will become so popular.
What’s great about streaming is that it’s easy enough to stand up all these FAST channels and FAST services in different markets. With cable, you had to make a significant investment if you wanted to say, launch a channel in Europe. That is not going to be the case with streaming and FAST channels.
AW: As all of the SVOD networks launch their ad-supported tiers, the assumption is that those tiers will have very low ad loads, possibly limited to pre-roll. That means there will be pressure on the FASTs to increase their ad loads. Should they?
RK: I think that the size of the ad load needs to take consumer preferences into consideration, because first and foremost we are serving the consumer, and consumers do not want heavy ad loads. That is why advertisers will tell you that they do not want to be the 18th ad a consumer sees in a 30 minute show.
The solution to having lower ad loads is to make the ads more relevant to consumers. In the old model, the only way to make more ad revenue was to increase the number of ads. But with all the data we have at our disposal, FASTs can make sure our advertising is more relevant to the user which is something advertisers find very valuable.
For instance, we just launched a program called “Guaranteed Outcomes. And what that entails is that we tell the advertiser that we are going to guarantee the outcome that they want, whether that is downloads on their website, or site visits or actual sales. There are advertisers that are willing to pay a higher price for that guarantee, which is one way we will keep our ad loads down.
