The first in a series of Innovator Spotlights from our Special Report, FASTs Are The New Cable

“Right now the FAST ecosystem is still developing. It’s early on and folks are trying to figure things out,” notes Sean Buckley, Magnite’s Chief Revenue Officer. “But I think that standards are developing over time as the market matures. And I do think the industry is maturing in a positive way, and certainly has been doing so over the last couple of years. So things are on the right track.”

ALAN WOLK: There are FASTs that are owned by the OEMs and FASTs that are owned by major programmers. What are the relative strengths of each?

SEAN BUCKLEY: I think this is a very important dynamic. Let's start with the OEMs. I think they have multiple advantages they can leverage. Number one is discovery. The apps are operated by the device manufacturers themselves. That gives them an advantage in terms of what the discovery process is like, and what the overall consumer journey is like as soon as you turn on the TV. That's a big  inherent advantage that the OEMs have. 

From an advertising standpoint, the OEMs obviously have very unique first party data assets. And so they're able to layer that first party ACR data on top of the FAST inventory that they own, as well as across their “carriage deals” e.g., the distribution deals where they get a slice of inventory from third party apps in return for distribution. That is proving to be a really compelling value proposition to buyers. 

That's not to say that others don't have first party data. But I think the capabilities that the OEMs have around that data is uniquely differentiated.

As for the FAST apps that were built or acquired by the major programmers, I think the opportunity there is to selectively include a unique content proposition. Those companies all maintain a deep portfolio of popular well-known content that they can incorporate into their offering. And it’s a big draw to have that unique content so that when a consumer wants to watch one of those shows, they have to go to that app, and once they are in, it becomes easier to get them to come back or to watch something else. That is their big advantage. 

ALAN WOLK: As streaming in general draws in more viewers and more demand from advertisers there is going to be pressure on the FASTs to notably increase their ads loads. Do you think they should?

SEAN BUCKLEY: I do not think they should. I think the consumer experience has to be top of mind, and as we've seen from the traditional television ecosystem, I don't think consumers will tolerate really extended ad loads. Particularly for the more casual type of viewing that you have on the FASTs, where it's not something someone absolutely feels the need to watch live at that moment in time.

I think there is going to continue to be a very measured approach around the length of the ad breaks and the overall ad loads on the FASTs, so as not to impede the consumer experience. I just think that's imperative. And if it gets untenable for the consumer, you're probably going to see accelerated churn.

ALAN WOLK: The FAST model is doing very well in the U.S. right now. How do you think it will do globally, especially in the sort of emerging economies where pay TV has been the exception?

SEAN BUCKLEY: So I think this is another really important dynamic. Number one, I think there's a huge opportunity here because streaming really does open up a global opportunity for a lot of these companies. And so clearly, that's an upside. 

In terms of the FASTs, you also need to look at local populations and what their economic circumstances are, and what they can afford to pay.

I would also argue that the TV landscape in terms of what audiences are accustomed to changes pretty dramatically based on where you are.

If you look at the US, for example, it's a little bit of an outlier. If you zoom back, before cord cutting really took off, you had a situation where the vast majority of the population paid for TV— and on average they were paying a pretty substantial sum.

On top of that, you had a situation where ad loads had gotten very high—14 to 16 minutes an hour which is pretty substantial for consumers. Layer on the fact that you didn't have a great track record of customer service in the cable industry either. 

The result really was a perfect storm—you had an industry that was ripe for disruption, which is a big part of why streaming in general has been so successful in the US.

If you go to other markets, though, even more developed markets, you’ll find very different conditions. In many countries, free to air is a much more common way to view television. Now, the content selection might be narrower than in the US, but folks can tune into a number of different linear channels that they can watch for free. And in most cases the ad loads are much lower than in the U.S.

In those markets people are used to getting a decent  experience and not paying for it. So they may be more resistant  to paying a lot for streaming subscriptions which is why the FAST model could prove very attractive, even in places where people conceivably have the wherewithal to pay for subscription streaming. It’s just not what they are used to.

ALAN WOLK: Streaming was supposed to be all about binge viewing and on demand. So why are linear channels doing so well on the FASTs?

SEAN BUCKLEY: I think from a consumer experience standpoint, there is certainly an appetite for that leanback experience. Speaking personally, having to go in and proactively select what show to watch next can be  a really stressful situation in our household! (Note this is a joke!) especially when we're at the end of a series and need to find a new one.

So I definitely think there is an appetite for that kind of leanback experience, to just experience the content in that manner at times, versus having to constantly make an intentional choice. But there are definitely times we know exactly what we want to watch, which is why I think it’s important to have options available for consumers. 

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