Earlier this year, Netflix co-CEO Ted Sarandos said his company is “keeping an eye” on the growth of free ad-supported streaming TV services, but suggested that the streaming service has a lot on its plate right now and is unlikely to invest in a FAST service in the near future.
However Alex Hole, vice president and general manager of Samsung Electronics Europe, argues that Netflix and other SVOD services may want to take note of the cultural shifts which are driving audiences towards FAST, and move FAST up their own agendasTV.
Subscription video-on-demand (SVOD) services have dominated the television landscape for the last decade. Netflix and Disney+ – titans of this space – have recently leveraged their ad-free offerings to attract additional consumers.
Ongoing economic uncertainty, however, is likely to challenge their position. Kantar observed that streaming subscriptions across the UK fell by more than 2m in 2022. And it’s forcing streaming platforms to change tack.
‘Basic with Ads’ – Netflix’s lower cost subscription tier that includes advertising – was launched in November in a bid to stem the flow of departing users. Disney quickly followed suit with its ‘Disney+ Basic’ option. These shifts marked the streaming titles’ first-foray into ad-supported video-on-demand (AVOD) – and a departure from the traditional ad-free framework that has served them well over the years.
As we have reported in our Behind the Screens study, audience behaviours are changing too. Consumers are engaging with multiple streaming environments – and this extends beyond just SVOD services. Gaming and free ad-supported TV (FAST), a subset of AVOD, have also experienced an increase in usage.
Two years ago, AVOD and FAST were seen as noise distracting from the broadcasters in their own battle with SVODs for audiences. Now, FAST is one of the industry’s hottest topics. And this is no fleeting trend.
By embracing the principles of FAST – engaging, premium, and free content that is easy to discover; delivered to audiences when and where they want; funded by targeted and relevant advertising – these streamers can put themselves in the fast lane for future streaming success.
Being pragmatic in an ever-changing landscape
During the last decade, the pendulum has swung from a majority linear viewing behaviour amongst UK audiences to one that now increasingly uses streaming. And within streaming, SVOD was always the keen favourite; watching as much as you want, whenever you want, without ads, for less than a tenner a month (in most cases).
Fast forward to now, and that tenner a month is more like £20, £30, even £40 a month, because it’s not enough to just have one subscription. Consumers want access to Netflix, Disney+, Amazon Prime, Now TV and more to get access to all the content they want (or, more likely, to keep up with all the latest shows that have been recommended to them). It can be overwhelming. Pair this with tougher economic times and you’ve got a growing cohort of consumers rethinking their spending habits – but not their viewing habits.
In the first half of 2022, we saw that audience viewing times across SVOD platforms on our TVs fell 5 percentage points (pp), whilst AVOD experienced a 5pp positive swing.
FAST services also enjoyed a faster rise to prominence than expected in the second half of 2022, with European viewing hours across FAST increased by 51% between July and September 2022.
Understanding these new and changing audience behaviours and diversifying how content is delivered could enable streaming platforms to unlock greater subscription numbers. And this is where incorporating those principles of FAST services can pay dividends.
The best things in life are free
Netflix and Disney may have invested heavily in their content catalogues. But premium content alone doesn’t guarantee success.
Consumers crave convenience. They want content to be easily discoverable. High-quality user interfaces (UI) allow consumers to seamlessly browse through extensive content libraries. These have been instrumental in allowing FAST services such as Samsung TV Plus to thrive – and this trend also rings true for SVOD services’ paid-for tiers. Staying faithful to this across their new ad-supported tiers is the catalyst for providing a best-in-class ad experience.
The ‘binge watching’ culture which has developed over the years reinforces consumers’ desire for lean-back viewing experience. The abundance of content is a stepping stone to choice paralysis – almost 50 percent of viewers acknowledge they give up trying to find something to watch after spending too long browsing. FAST channels have leveraged a linear programming format to ensure viewers enjoy a simple, straightforward viewing experience. Identifying audience’s viewing preferences is key to SVOD platforms delivering content to consumers where – and when – they want.
Consumers might not pay a monthly fee for FAST services – but this doesn’t mean it doesn’t require funding. These environments rely on targeted, relevant advertising. Samsung Ads’ ‘Understanding Advertising Engagement’ identified FAST and AVOD ads as consumers’ favourites. Enhanced relevance, shorter duration and reduced frequency are all factors ensuring they didn’t disrupt the viewing experience.
Netflix and Disney have impressive track records of successfully tapping into – and moulding – cultural shifts over the past decade. And this should give the industry confidence that these streaming giants can deliver premium ad-supported models which meet the demands of today’s TV viewer.
Tapping into what makes FAST a compelling proposition to audiences and advertisers can empower streaming titans to continue widening the audience pool they attract to their platforms – and thereby advertisers. Consumers’ appetite for lean-back, convenient experiences does not appear to be waning.