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Why Haven’t FAST Services Taken Off in Europe?

  26 April, 2021

A lot of the growth in connected TV ad inventory in the US has come from free ad-supported streaming TV services, known as ‘FAST’ services. These apps look much closer to traditional broadcast TV than ad-supported video on-demand (AVOD) products, running 24/7 linear channels for viewers to flick through, with ad breaks woven into the content.

But whilst the likes of Pluto TV, XUMO, Tubi and Fubo TV have become established names in the United States, they’ve yet to really establish themselves in Europe, in spite of the fact that two of those – Pluto TV and XUMO – have both entered the European market.

However, Europe still hasn’t seen many homegrown European FAST services being launched. That’s not to say European FAST services don’t exist. For example Joyn, the German CTV service jointly owned by ProSiebenSat.1 and Discovery, has free live channels (as well as on-demand content). But the vast majority of successful CTV apps have either been subscription-based or ad-supported video on-demand (AVOD).

In part, this is likely due to the fact that the linear broadcast services which FAST services compete with tend to be a lot cheaper in Europe than in the US.

“Cable TV prices do not pose as much of a burden in Europe as they do in the U.S. market,” said Navdeep Saini, co-founder and CEO of DistroScale, which owns FAST service DistroTV. “This means that cord-cutters have not had quite as much of an impact on the European market yet as they have in the U.S.”

Stacie Anthony, head of OTT at VideoElephant, a short-form video platform which runs a FAST service, said that in the US, FAST services are pitching to consumers who have already cut the cord and are looking for an alternative. In Europe, it’s more of a case of trying to convince audiences to switch over from free-to-air TV to FAST services, or to use them as a complement to their existing TV packages.

And this isn’t easy to do. In the UK for example, assuming a household pays their TV license, they can access around 70 channels through Freeview without paying for a pay TV subscription. So FAST services have to compete with the array of free content consumers already get as standard via their set-top boxes in order to break through.

For any CTV service aspiring to expand across Europe, it’s also important that they acquire local content suited to each market, which is no easy feat at a time when demand for content is seeing unprecedented demand. But for FAST services, the need to populate 24/7 linear channels compounds the problem. With SVOD, a new service can start small with a handful of local shows and build from there, but linear channels require a pipeline of fresh content.

VideoElephant’s Stacie Anthony said that filling linear channels is a challenge in every market, but even more so in Europe. “Trying to find enough content to fill a news channel, a sports channel, a lifestyle channel and so on, without that content feeling old and stale, is always a challenge,” she said. “And that’s even harder outside of North America, because there’s just not as much content being created, which is inherent of the entertainment industry in general.”

And rolling out at scale in Europe means going through this process for multiple markets. Stefan Van Engen, SVP of marketing and content operations at XUMO, said that developing individual strategies and content line-ups for each country is the biggest challenge for FAST services like his own. “It seems simple to say the EU is not one territory, but we see time and again, people treating it as a single territory as opposed to paying attention to each individual language, culture, and country,” he said.

Kent Rees, general manager and CMO of FAST Studios, a company which creates channels for FAST services, said there’s a “simple business equation that requires weighing the expense of dubbing content into local languages versus ROI,” but that essentially just determines which markets make most sense to enter first.

But Rees said there are also opportunities for FAST services to help lesser-known local content find new audiences – since the channel-flicking nature of FAST helps with discoverability. So striking deals with local and independent content owners can be a cost-effective way to populate 24/7 linear streams.

Change is FAST approaching

Despite these challenges, all those VideoWeek spoke with felt positive about the future of FAST services in Europe.

DistroTV’s Saini said that increased adoption of smart TVs and OTT devices in Europe will boost takeup of FAST services, by making these services themselves more discoverable. If consumers are primarily watching content delivered via an internet-connected device, it’s more natural to switch over to a FAST service from a CTV app interface, rather than switching back to linear broadcast TV.

And XUMO’s Stefan Van Engel said he’s seeing signs of Europe catching up. “When XUMO jumped into the EU market almost two years ago, it felt like FAST and AVOD direct to consumer platforms were multiple years behind the US market,” he said. “Between COVID and the continued explosion of the US market, the EU is beginning to catch up quickly. There is a lot of opportunity to bring diversified ad-supported content to this market. And the advertising world, both programmatic and direct, are also shifting dollars into these platforms, which helps to accelerate the growth.”

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