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31 August 2023

Tensions rise with FAST channels, OEMs, rebel ISA ad-alliance looms

Independent FAST channels and content houses are growing sick and tired of giving up their ad inventory to OEMs. That was the headline takeaway from a panel discussion at last week’s Streaming Media Connect 2023, where representatives from several minority-focused US content houses said that OEMs were doing a botched job of selling ads to their niche, minority audiences.

Faultline has noted previously that OEMs have more than a pinch of hubris when it comes to FAST, arguing that they are best placed to sell ad inventory due to the vast amount of first-party data that they can collect from their users’ viewing habits. We got the feeling that this is starting to grate hard on many of their channel providers, with rebel alliances already underway.

“Channel operators cannot build sustainable business models on revenue share from OEM,” argued Damian Pelliccione, CEO and Co-Founder of LGBTQ+ FAST network Revry. “The needle keeps moving; they keep wanting to take more and more – it does not work!”

Revry has launched its own LGBTQ+ ad network PrismRiot to offset this, which Pelliccione says has got kudos from some of the industry. Revry is one of the founding members of the Independent Streaming Alliance (ISA), a consortium of over 35 publishers which are not owned by a ‘major eight’ media conglomerate. According to measurement firm, the ISA accounts for 60% of all fast inventory. “Collective bargaining is coming,” warned Pelliccione.

Certainly, the CPMs (costs per thousand impressions) are impressive. Revry can accrue CPMs of between $50 and $60 at the height of Pride season, with all bids starting at $35. This places it in the upper echelons of FAST revenue, with only leading platforms like Tubi and Pluto TV able to secure average CPMs in the mid tens.

Aside from the fact that its audience base is both large and niche – and therefore highly targetable – Pelliccione says that another pull for advertisers is the relative youthfulness of Revry’s LGBTQ+ audience. “We are focused on a demographic that is mainly Gen Z. Over 75% of our 5 million monthly active viewers are under 45,” he explained.

Christina Chung, VP Business Operations at Spanish-language studio Estrella Media says she faces the same issues. “We know our audiences better than our revenue share partners,” she implored, with others on the panel noting that the Latino market is particularly brand-loyal.

“50% should not be the ceiling for revenue share. There should be arrangements in place to allow us to buy back inventory,” Chung continued

There was also a sense of injustice regarding how the performance of minority-skewed FAST channels are measured. “OEMs will measure us against AMC’s FAST network, but really we should be measured against content in our own specific audience segments,” she argued, with Pelliccione noting that this was a key focus for the ISA going forward.

Jeff Clanagan, President & Chief Distribution Officer at black-owned production company Hartbeat (founded by comedian Kevin Hart) agreed that ad sales are best left to the channel providers who understand their audiences. “No one can sell Kevin better than us. Right, now there is more money on the table than we have inventory available for,” he told the panel.

With revenue share models not bringing in enough revenue, channel owners are turning to third-party distribution deals. Clanagan shared that Hartbeat has first-look deals with Netflix and Peacock for scripted and unscripted content, while Die Hart, which was initially produced for the infamous short-form platform Quibi, has since been distributed via Roku and Amazon Prime Video.

Broader brand partnerships are also an option for some extra cash. Hartbeat has sponsorships from Old Spice, while Revry has a brand deal with Nike, among many others.

With FAST now “going to college”, as moderator Chris Pfaff put it, CEO of advisory firm Chris Pfaff Tech Media, the discussion allowed the panel to reflect on their various FAST journeys as the market enters a new stage of maturity.

Marisa Elizondo, VP of Content Strategy & Acquisition at sports focused virtual MVPD Fubo, said that the platform has leaned heavily into FAST over the past year, launching over 100 channels.

Fubo is keen to present FAST as equal to its live, linear and VoD content, seamlessly mixing FAST channels among the paid ones in an EPG which is organized by genre.

“We were certainly worried whether our subscribers would see additional free content as additive or as unnecessary filler,” Elizondo shared.

Estrella Media is only three years into its FAST journey, but already the format is making up the bread and butter of its digital business, according to Chung, bringing in multiple millions of dollars. “Viewers are looking for content outside of their subscriptions,” she argued.