Canada-based broadcaster OUTtv, which specialises in LGBTQ+ oriented content, turns 25 next year, so it’s seen significant change in the media landscape over the course of its existence. The company started out operating traditional linear cable channels, but when streaming and subscription video on-demand (SVOD) models started to go mainstream, it was quick to react.
OUTtv launched its first SVOD offering in Canada in 2016, and that’s rapidly grown to become the broadcaster’s primary business — CEO Brad Danks says SVOD now accounts for close to 75 percent of total revenues for the company.
More recently, the growth of free ad-supported streaming TV (FAST) has opened up another new avenue for the company, one which is more similar to OUTtv’s cable TV roots. But while Danks says he does see significant opportunities in the FAST space for his company, and meaningful ways in which the FAST model improves on traditional cable models, there are still big areas where more work is needed.
A second life for SVOD content
Danks says there’s synergy between OUTtv’s investment in SVOD and the launch of its FAST channels. Moving into SVOD has required the company to focus on creating and licensing lots of new premium content, and FAST provides an avenue for reusing that content.
“In SVOD, the rule amongst most providers is that 20 percent of your content is getting 80 percent of your viewers, and sometimes it’s even more dramatic than that, depending on where you are,” said Danks. “So we launch new shows on our SVOD products and they’re the ones that generate the views, that’s really how it works. And over the years we’ve pushed more and more into original programming which is more expensive, but has a larger payoff at the end. FAST gives you the opportunity to reuse that content.”
Given OUTtv’s experience in traditional TV, the company is familiar with populating and running linear channels. Even so, Danks said that getting a FAST business up and running has its challenges. Distribution is one of them: while Danks said that generally negotiations with FAST platforms are easier than negotiations with cable companies, distribution contracts can take a long time to get completed. OUTtv partnered with FUSE Media for its FAST launch in the US, because Fuse already had contracts with all the major platforms.
On the content front as well, while FAST is a useful outlet for older content originally produced for SVOD, Danks nonetheless says it’s a “constant battle” to craft a compelling mix of content which will perform well. The content side of FAST has matured, making it harder to find affordable licensed content which will draw an audience
“All of the platforms want shows that audiences will love to watch and are super popular, but aren’t already on FAST,” said Danks. “If you talk to the platforms, in many ways they’re looking for content that doesn’t exist — pretty much everything has already been put on FAST, and if it’s not there already, it’s on its way.” Ideally, content should be popular, with enough pre-awareness to catch audiences’ attention as they flick through channels, as well as affordable, but that’s a rare combination.
Quick to grow, slower to monetise
For OUTtv, the solution at the moment is a combination of licensed content from third-party studios and its own originally produced content, typically brought over to FAST around a year after releasing on OUTtv’s SVOD services. And while there are some frictions and challenges around getting FAST channels launched, Danks said progress in terms of building an audience has been rapid.
“We’ve been pretty shocked at the pace of it on most of the platforms,” he said. “The expectation is that it’ll take around four to six months to build an audience, but we’ve seen our audiences grow pretty quickly. And the platforms, generally speaking, are good at marketing to their own audiences. So if you have a compelling offering, you can build an audience pretty rapidly.”
There are, however, bigger challenges with FAST at the moment in Danks’s eyes. “Advertising is really the hardest part of FAST, I think the advertising side still needs to improve dramatically.”
Building scale is part of the challenge here. “You need hundreds of thousands of minutes a month, sometimes millions of minutes a month in order to get the scale to sell advertising of any calibre,” said Danks. “Then there are big questions: who is selling the advertising, what does your deal with them look like, and how much are you getting in the marketplace? We need to make sure we’re getting high enough CPMs, and have the right types of sales structures in place in order to make things work for both parties.”
Advertising deals work differently across different platforms, and some work better from a channel owner’s point of view than others. For example, some platforms take half of their partners’ inventory to sell it themselves, others want all of it. “We’re sort of a specialised buy, and we’re pretty good at selling our inventory ourselves, so we prefer to keep at least half of it, and then we’re happy to share those revenues back with our partners,” said Danks.
Data sharing is another area which could use some work. “The data needs to improve, we need to know more,” said Danks. “There are a slew of issues like privacy concerns and regulatory concerns, but we’d like to know more about what’s happening on those channels.”
“Free doesn’t support the production costs”
Even assuming that the advertising side of things improves, Danks sees FAST’s future as tied to SVOD. “We’ve learned that audiences like curated channels, they like having those choices made for them, and they like free,” he said. “But free doesn’t usually support production costs, and hasn’t done for a while, so you need to have a subscription model as well. And we see the future as the integration of FAST and SVOD to create a business model which works for all consumers, but also the content providers.”
FAST already works as a means for promoting the SVOD offering — for example, OUTtv might air the first episode of a new series on FAST, as a means of drawing audiences into a paid subscription. And a tighter relationship between the two, where both exist side-by-side on the same platform, could enhance that dynamic.
“And let’s not forget that there are only so many advertising dollars available in the marketplace”, said Danks. “If you’re an ad only business, you’re gonna always struggle with that fact. I think as a content provider, you need to provide a variety of opportunities. You can’t assume your consumer is going to behave a certain way. And that’s why I think that model, with SVOD and FAST both integrated, is sort of inevitable.”
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