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Troubleshooting my Mother’s TV lured me into the strange world of FAST TV, a weird content vortex that is reshaping the cable world.
Welcome to People vs Algorithms #71.
I look for patterns in media, business and culture. My POV is informed by 30 years of leadership in media and advertising businesses.
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My Mother complained that she had not been able to watch the local news for weeks. Something was amiss with her new TV. She had neither the energy or savvy to sort it out. Fortunately, her new remote had one of those “Netflix” buttons. That made sense. Netflix would have to do for now.
A few weeks back, my son and I were at her place for a long overdue visit. Attempting to watch the NBA finals had led us to the source of her troubles, one that sits directly at the intersection of a dying cable ecosystem and an industry scrambling to find its replacement. The change touches everything from the befuddling puzzle of a TV interface in transition, to the anachronistic notion of a “channel” in an on demand world, the leverage of OEM TV manufacturers, to the future of poor CNN. And live sports. Sports are so important.
The “electronic programming guide” (EPG), that thing that lists channels of content along a timeline, plays a lead role in our drama. In this case, LG wanted to provide Mom with a new EPG filled with an endless list of unfamiliar channels. And the ads. They wanted her to ingest lots of ads.
The old cable EPG was the wealthy merchant at the center of a tightly controlled system, like the TV dial before it, doling out consumer access to a limited set of content providers, feeding the audience a steady drip of paid content with 15+ minutes of advertising per hour.
Netflix upended that world, empowering consumers with a satisfying alternative to the EPG — a library of commercial-free content, paid for with modestly priced subscription offering. A hundred linear cable channels became full ad-free library access that you could cancel with ease. Our understanding of TV quickly changed. Anywhere, anytime catalog access trumped linear channel selection. Algos replaced programmers. Once again, the tech world proved much more adept at optimizing interfaces for humans than old fashioned communication companies.
Mom loved Netflix but missed the familiar. She, like many in Hollywood, wanted the old system back. Well, some of it at least.
When they delivered that fancy new LG TV, no one had told her that her familiar cable programming guide was about to be ambushed by a Xumo-powered LG guide, replacing it with a confusing array of familiar and unfamiliar media brands, show choices and superficial utilities. She had left the safe world of cable, without her ID or credit card. This was hostile new terrain.
Finding her way back was not easy. It would require her to 1) select the cryptic “source” button on the LG remote; 2) steady her shaky elderly hand and use the LG remote as a pointer to an on screen interface; 3) select the cable input as the HDMI alternative; 4) switch to her cable company provided remote, it too an award winner in a recent “modern disasters of design” competition.
God forbid she complete these instructions only to decide to watch Netflix again and, logically, press the fucking Netflix button on the LG remote. Groundhog day at the assisted living facility. We rehearsed the process with the clarity of “stop, drop and roll.” I have low confidence our tutorial will stick. My mother will be permanently caught in the hell vortex of media progress.
None of us are immune from this complexity. A similar scenario played out today on my Samsung set. Where possible I prefer to have AppleTV do battle with the clunky OEM provided default interface. But those little Samsung interface monsters are getting more and more aggressive. My TV had defaulted to a Samsung TV Plus EPG. I, like my Mom, had unwittingly entered the new world of FAST TV, a lively newish frontier and an important player in the shapeshifting world of entertainment. FAST hopes to breathe new life into the old idea of a linear guide. And it had me thinking about how all of this plays out.
A bit of background... FAST channels, or Free Ad-Supported Television, offer free access to live and on-demand programming, supported by advertising revenue. Leading purveyors of FAST include Pluto TV, Xumo, Tubi, Roku and Samsung TV Plus. Each is comprised of hundreds of FAST channels. Early innovators like Pluto TV (now owned by Viacom) found the construct a convenient way to redeploy vast libraries of low cost library content in a construct, serve cost conscious cord cutter online and on smart TVs and open up valuable video advertising inventory. The FAST category will pull in over $4B this year in the US, a sub 7% but growing part of the $66B US TV ad market.
For TV makers like LG and Samsung, controlling access to content via a proprietary programming guide is a nice way to evolve their low margin reality and grab part of this market. TV makers can make more margin off a few hours of your attention than they can of the sale of the TV itself.
It’s easy to confuse FAST with more familiar concepts of SVOD or AVOD (Subscription or Ad-Supported Video On Demand). These are library concepts like Netflix or Amazon Prime. The difference between AVOD and FAST is sort of academic. The FAST journey begins at channel level delivered in a “live” stream. But live is a stretch. Some of the news channels are live. Most FAST is packaged catalog. But it’s a convenient way for you to understand it.
Indeed, FAST channels are a bit of a retrograde concept, an admission that sometimes the path to the future needs to be paved with ideas of the past. They are just curated packages of content, slotted into a linear construct just like an old-fashioned cable channel. They are packaged in all the ways one might group content — by brands you trust (CBS News, Bloomberg TV+), digital and magazine brands that have enough catalog to spin up a channel (Bon Appétit, This Old House, Chive), old show brands turned into channel brands (Divorce Court, The Price is Right), thematic bundles (All Action, Drama Life, Halloween!) personalities as channels (Conan, Jamie Oliver, Bob Ross).
If you have about 200 hours of library content and are looking for a new way to distribute and monetize it, package it in with a construct that you think might appeal to viewers and make a FAST channel. Unlike the cable world, FAST is unconstrained by shelf space. According to Variety there are now almost 4000 of them (includes lots of local news). Over time a “channel” is conceptually just an algorithmic stream perfectly tuned for you. But there’s something fun about having someone program it for you.
In truth, you don’t really need to put the content into a self playing linear construct. But you do for a few reasons. It's easy and familiar, especially to older consumers — a connection to a more ambient, less deliberate TV past dominated by the programming guide. It’s a convenient way to slot in advertising against a schedule and blocks of content. It allows you to string together a small library into a 24/7 stream. FAST channels are analogous to Spotify playlists for TV.
Ok, what’s the point of all of this. A few things I observed…
A generation of TV watchers are confused by the deteriorating cable world and emergence of new offerings. For many, cable is the only option. My mother is not alone here. Walking away from cable means: 1) relying on confusing interface across OEM providers (LG, Samsung, Visio) or Roku as a new starting experience to access this world; 2) losing simple, familiar access to local news; 3) stitching together an array of streaming providers and all of the app and authentication complexity that goes along with it; 4) hunting down sports rights owners to watch their favorite teams. Cable will have staying power with a generation that has no patience for a fragmented new world.
Second, I kinda missed the serendipity of linear TV. FAST is a strange ambient world of entertainment filled with things I would never pick from an SVOD. Right now lions are devouring zebras on Magellan TV’s “Wildest Africa: Ngorongoro, Born of Fire.” No one picks that on Netflix. It’s kinda like thumbing through an old record collection. Media never truly dies, it fades then morphs into something new. We all carry some nostalgia for the media experiences we grew up with.
Reduced FAST ad loads (about 6 min per hour vs cable’s 15) combined with a much broader CPM-based buying market, makes the FAST advertising construct more tolerable than cable. FAST makes TV advertising accessible to a far larger cohort of marketers.
Like any immature content ecosystem, FAST is low budget, outdated fare, dredged from under-monetized archives. Presently, FAST mostly serves a young and lower income audience. This will change as audience and money flow. Sub tiers will surely evolve. Innovative content experiments will emerge. But in the meantime, FAST carries the charm of cable access TV. Its cool because its low stakes, hyper-niche programming. It’s weird.
As I see it, FAST offers an important life raft for the cable business. Today, it is an opportunity to monetize library content on the margin. Aggressive providers like A&E are repackaging content across multiple FAST offerings. Revenue streams are modest, especially next to scaled cable carriage and advertising P&L’s. But fast offers a way to complement legacy positions, play fast and loose and syndicate with abandon.
Speaking of… CNN should be playing aggressively here. The failed CNN+ was an expensive path to go direct-to-consumer. Low cost streaming news offerings, syndicated broadly across FAST providers seems like a better way to evolve and innovate. The future will demand a dramatically different cost profile than the past. FAST is a great place to rationalize an outdated cost structure in parallel to CNN’s slowly eroding cable position.
News and sports are the real lynch pins to FAST becoming something that mortally threatens cable. News is slowly find a path, careful not to compromise lucrative retransmission revenue relationships on the way. Most sports will find far more lucrative relationships inside of paid services, but as we have seen with the Phoenix Suns and Phoenix Mercury, local franchises looking to build fan bases post RSNs are embracing free distribution.
Personally, it’s getting increasingly difficult to justify my YoutubeTV bill outside of infrequent news consumption and the odd in market football game. Ultimately, it will have to become a platform for my individual paid relationships (ie: NFL Season Pass) and a good interface to manage free FAST channels. A well-designed bridge interface where linear meets library while minimizing existing carriage fees. If it costs too much, someone like Amazon Prime will take its place. Or maybe Apple?
Apple could compete more aggressively with a FAST offering on their own on AppleTV. Today, you access FAST providers on AppleTV view the app store through companies like Pluto. Apple could provide an EPG of their own and quickly own a piece of the market. I would welcome this. So would Mom.
When channels and content volume explodes, the advantage goes to interface owners that enable discovery. TV makers will continue to exert pressure as a new interface. They are not great at software but hardware margins pressure will push them to find a future in advertising as your content on ramp.
The TV business is very much out of equilibrium right now. Incumbents are desperate to lull consumers into a new interface. YoutubeTV is well positioned in this regard. OEM manufacturers have a front of line advantage, without content and sadly, interface design sophistication. Roku has so many of the pieces, but lacks scale and IP to compete even if they have understood better than most that interface control is a valuable strategic position. Netflix will use a new advertising capability to slowly find the intersection between a live stream and a content library. Apple will slowly pick away at this too. Deal making will continue as the remaining content owners fight to find the scale to underwrite a profitable direct connection with consumers.
In the end, when you lose control of the interface you lose the game. That’s cold comfort to many, like my Mom, who become roadkill along the way. She will stubbornly stick with the old, unless we find something that makes all this nasty complexity disappear. It will have to look a lot like a Netflix button.
My compadres are busy with travel and Cannes this week. The podcast will return next week. In the meantime, let's cut to our old Canadian cable access friend in Aurora, Illinois.