Free ad-supported streaming TV (FAST) services benefit from a lack of U.S. viewer access to free linear TV, partly because of a national amnesia about the presence of over-the-air broadcast. Tens of millions are already using FASTs, generating billions in ad revenue. But it will be much harder in the UK for FASTs to carve out an audience. In the first of his monthly columns for Videonet, Colin Dixon, Founder & Chief Analyst at nScreenMedia, reviews the numbers and explains what is driving the growth trajectory in each market.
Free ad-supported streaming TV (FAST) services benefit from a lack of US viewer access to free linear TV. Tens of millions are already using FASTs, generating billions in ad revenue. But it will be much harder in the UK for FASTs to carve out an audience.
UK and US TV audiences have embraced SVOD
On its face, the UK and U.S. TV markets are proceeding along similar evolutionary paths towards a streaming future. Most homes in both regions have a connected TV, and the penetration of SVOD services far exceeds that of cable, satellite, and telco TV. SVOD services have become so established that 3-in-5 US and 2-in-5 UK homes pay for two or more services.
However, when it comes to free ad-supported streaming TV (so-called FAST) services, sharp differences in viewing environments will hamper adoption in the UK and favor it in the U.S.
The U.S. ripe for FAST growth
There is a dearth of free linear TV content available to consumers in the U.S. It is not that they don’t have access to it. They do. Local broadcast TV is available to most people via an aerial. However, there seems to have been a sort of national amnesia about free over-the-air (OTA) TV. Of the 127 million U.S. homes (122 million TV homes,) 35 million (29%) have a TV connected to an aerial, and 24 million (20%) use it at least weekly. Seeing a TV aerial on a roof in the U.S. is a rarity! What is more, U.S. TV broadcasters have mostly rejected the idea of making their OTA channels available free to stream to a connected TV.
Smart TV manufacturers and FAST services like Pluto TV benefit from this situation. They make it very easy for a TV viewer to continue to watch the still-popular linear format. TV manufacturers like Samsung and LG build FAST services into the interface, giving one-click access from the smart TV interface.
When a viewer launches a FAST service, they feel immediately at home. There is a linear TV guide with channels covering all their favorite genres. The channels play and feel just like regular TV, even down to the ad load, which is about the same as traditional TV: 13-14 minutes of ads per hour.
And tens of millions of people are finding and watching FAST channels. Pluto TV says it has 60 million monthly active users, most of which are in the US. These users are driving spectacular revenue growth in the industry. Paramount Global, Pluto TV’s owner, says it earned $1 billion in 2021.[i] The whole FAST industry generated $2.1 billion in the US in 2021 and will double that total in 2023.
UK FAST growth will be much slower than the U.S.
Unlike in the U.S., most UK homes already have free linear TV via an aerial. 63% of all UK TV homes (17 million) use FreeView, and 41% have it on their main TV set. In addition, UK broadcasters have embraced the idea of free ad-supported streaming, with all major TV channels available to stream directly to connected TV via an app. Broadcasters have even gone out of their way to make it as easy as possible to find and stream their TV content. The Freeview Play app combines all the primary TV channels with BVOD content. TV sets from manufacturers like Samsung, LG, and Sony come with built-in access to FreeView and the Freeview Play app.[ii]
When a UK viewer sits down to watch TV, the value proposition offered by FASTs is far less compelling than in the U.S. There is the wealth of content provided by SVOD, as in the U.S. But there is also a vast amount of free, current TV content from FreeView, broadcaster apps, and Freeview Play. FAST’s heavy reliance on library content and off-premium live news and sport make it far less appealing.
FAST services will find similar market conditions in most European countries. So, it is not just in the UK where they will struggle. However, it would be wrong to say they will find no audience at all. After all, who doesn’t like to binge classic Sherlock Holmes or channel 5’s Build Britain every now and again? That said, crossing the £1 billion ad revenue threshold could take a lot longer than in the U.S.
Colin Dixon is Chief Analyst & Founder at nScreenMedia.
[i] This opinion piece uses the US definition of a billion: 1 billion = 1,000 million.
[ii] LG dropped support for FreeView Play in its 2020 TVs but restored it for 2021.