OEM FASTs Continue To Grow, Netflix Makes A Very Smart Hiring Decision
1. OEM FASTs Continue To Grow
In our new report, FASTs Are The New Cable, we talk a lot about the growth of the FAST services owned by the various OEMs. They have an advantage in that they are the interface for the TV’s operating system, the default when you turn on the TV. Not only can they promote their own programming that way, but they can personalize the entire interface based on the ACR data they collect.
Which is why it is not the least bit surprising that both Samsung and VIZIO announced major wins for their FASTs—Samsung TV Plus and WatchFree+—this week.
Samsung has reimagined Samsung TV Plus right down to the logo, adding in new originals, new channels, a much expanded VOD library and additional local news and weather coverage. VIZIO, meanwhile, announced a deal with Scripps that will see four new Scripps channels on WatchFree+ which will bring shows like NCIS, Chicago Fire, Law & Order: SVU, and CSI to the service.
Samsung announced a deal with Scripps too, though the real news here is that Scripps, a major cable player, is following the money and eyeballs and taking its popular dramas to the OEM FASTs.
Why It Matters
These moves pick up on two trends we identified in the aforementioned report: a trend towards quality, meaning that as the FASTs continue to add users, they will get better, more high profile content along with better, more personalized interfaces. This creates a flywheel effect—as they attract bigger audiences they get better content, which gets them even bigger audiences which gets them even better content…
The second trend, somewhat related, is that cable networks like Scripps’ Ion and A+E will continue setting up shop on the FASTs.
This makes perfect sense, as the cable networks are just looking to get the most eyeballs (and thus the most CPMs) for their library content. If they can find audiences on the FASTs, those audiences are only going to be additive to their cable audiences, and won’t cannibalize them, so why not?
One final note—Samsung announced that it was beefing up the on demand library on its FAST service.
On demand libraries are something almost every FAST service now has, along with linear channels.
Again, this falls into the “why wouldn’t you?” category, given that people like having both options, depending on their mood and reason for watching.
Meaning don’t fall into the trap of thinking that “FAST” only refers to linear channels. While those are indeed often referred to as “FAST channels”, the trend towards linear on SVOD—Paramount+, Peacock and Discovery+ all have linear channels and the rest are expected to follow—means that linear channels will soon be called (wait for it) linear channels.
FAST is an acronym for the business model of providing free content with ads, which is a pretty broad umbrella. Linear channels are one way FASTs and SVOD services deliver their content, on demand being the other.
Easy peasy.
What You Need To Do About It
If you are the OEMs, keep on doing what you are doing. Owning the hardware and the software, not to mention your own ACR data gives you a huge advantage. You are also a different beast than media company-owned FASTs like Pluto TV and Tubi, and there is a need for all of you in the greater ecosystem.
If you are a cable network and you are looking to expand your user base, the OEM-owned FASTs will make excellent partners. They can help with audience insights, ad insights and understanding how and where your linear audience intersects with your new streaming one. Try them.
If you are a viewer and you own a TV from one of these three brands (and given their market penetration, chances are you do) then check out their FAST services. They are, as the name implies free, and if you’ve read this far, you’re interested enough in the business to want to understand what makes them tick.
If you are in the industry and you’ve already read our report on the FASTs, we also have a series of three reports on the Emerging Smart TV Ecosystem. Check them out.
2. Netflix Makes A Very Smart Hiring Decision
Two big developments on the ad-supported Netflix front. First off there are the CPMs, which are rumored to be starting at $65 per thousand viewers reached, with a potential bump to $80 once everyone settles in. (Netflix, FWIW, has denied the rumors, claiming everything is still in flux.)
On the hiring front however, things are less in flux as it was announced that Netflix will be hiring two ad veterans, Jeremi Gorman and Peter Naylor. There’s been much nodding of heads on that one, especially (in my circles anyway) around Naylor, who is credited with getting Hulu’s ad business off the ground and turning it into a billion-dollar baby, no mean feat at a time when ad-supported streaming was an anomaly, and ad-supported streaming that people paid a subscription fee for even more of one.
Why It Matters
Who they are hiring is critical to understanding how seriously Netflix is taking the whole shift to advertising thing.
To refresh your memory, the way they handled it initially seemed very Silicon Valley. (The HBO sitcom) As in “Oh no our stock is down! Quick! Roll out the nuclear option! Advertising! We are launching advertising! All hands on deck!”
The fact that they’d have to eventually roll out advertising could not have been that much of a shock to them. (Or could it?) Because, as I’ve noted here previously, it must have dawned on them that most people in many of the 120+ countries they’d planted their flag in, places like Burkina Faso and Laos, did not have the sort of disposable income that would allow them to subscribe to a streaming TV service, let alone one costing around $10US each month, and Netflix’s goal has always been Total World Domination.
So there’s that, and then they went and struck a deal with Xandr and Microsoft, which struck many observers as based more on what Microsoft was not (a potential direct competitor) than what it was.
So there’s that too.
But then they hired Gorman and Naylor and faith seems to have been restored.
Allow me to explain.
Back in those pre-metaverse days when Facebook declared that video was the future and launched Facebook Watch, they made the curious decision to hire someone to run the division whose previous experience was running a successful online video site, someone who was, it turned out, completely unfamiliar with TV.
That led to the not undeserved impression that Facebook thought it was beneath their digitally savvy selves to actually try and understand TV, which then resulted in a general pooh-poohing of their efforts. (Said pooh-poohing was not helped by the general awfulness of the Watch product, but I digress.)
At the same time, Apple hired two industry pros to run their nascent TV business. Hollywood was thrilled. Everyone wanted to work with them. And while there were definitely some bumps in the road (“expensive NBC”) they have wound up in a very good place, with some of the most buzzed about shows in this goldfish-like business (10 points if you got that one) and an MLB contract.
Hiring Naylor and Gorman sends the same signal. Netflix is taking this seriously and they get that it’s not something that anyone could figure out.
Naylor, who, full disclosure, is a friend and former client, is a well-liked and well-regarded industry figure who, more importantly, has been to this rodeo before. He knows how to sell skeptical buyers on a product that is going to seem to many like a risk, given that is it brand new,
Meaning if anyone can get Netflix those alleged $65 CPMs, it’s Peter.
What You Need To Do About It
If you are Ted Sarandos and Reed Hastings, well done. Hiring people the industry knows and likes sends a good signal, and more than that says you realize you don’t know everything and that not everything needs to be “reinvented” by someone with little to no experience.
If you are Disney and HBO Max, this is a good development for you too, as Netflix’s success will help your success—you’re convincing the same people to buy high-end streaming TV.
If you are an advertiser, this is a great deal, at least initially, as there will be a whole lot of almost Super Bowl-like focus on the initial crop of Netflix advertisers.
If you are Naylor and Gorman, congrats and good luck. FIguring this all out—including the right proportion of ad-free to ad-supported subscribers—is going to be a huge challenge, but also a very exciting one.
Keep in touch.
