Omdia forecasts that the second and third largest FAST markets will be the UK and Canada, which will be worth over $500m and $300m respectively. While the three largest FAST markets will all be English-speaking countries, Germany and Brazil will be in fourth and fifth place.

Maria Rua Aguete, Media and Entertainment Senior Director, Omdia, says: “FAST channels in Germany will generate just over $200m in [2027], when those in Brazil will hit revenues of $100m – representing around half of the total Latin American FAST market, which will be worth $207m in 2027. FAST revenue in Mexico will be $93m in 2027, making it the seventh-largest individual FAST market.”

Omdia believes that while the number of channels and revenue growth will be significant in the next five years, improving content discovery will be critical to the continued success of FAST services.

Omdia says it expects Netflix to cap in-stream video ad loads and refrain from introducing ads in the user interface to maintain consumer experience – particularly internationally, where hybrid models are not yet fully established.

Omdia also predicts Netflix will generate 23% of its U.S. revenue from in-stream advertising in 2027, as well as 14% of its global revenue.

Maria Rua Aguete, Senior Research Director, Omdia, said: “Netflix is expected to generate just under a quarter of its revenue from advertising by 2027 in the US. With growth in SVOD expected to increase from $86B in 2022 to $118B in 2027, it comes as no surprise that all the major SVoD services including Netflix want to take part in that growth.”

The channel – Horizons: Powered By Banijay – will bring over 200 hours of UK content to Samsung TV Plus UK and LG Channels, including series such as Location, Location, Location, 8 out of 10 Cats and Pointless. Additionally, the channel will also offer drama titles such as Gunpowder and The Woman in White.

The company entered the UK FAST channel market earlier this year, launching its channel brands ‘McLeod’s Daughters’ and ‘Deal or No Deal USA’ on Samsung TV Plus UK. In addition to Deal or No Deal, Banijay Rights also launched the channels Fear Factor and The Biggest Loser on LG. The company now has 13 live FAST channels and more than 50 live streams globally.

Shaun Keeble, VP Digital, Banijay Rights, said: “Horizons isn’t just a name, it’s a way of thinking – and doing business – for us here at Banijay Rights. Launching our own, dedicated, Banijay-branded FAST channel in the UK is the perfect way to attract new viewers to some of our leading global IP – and with this country’s FAST and AVOD activity growing from strength to strength, it’s a fantastic time to expand on our already burgeoning suite of channels with Horizons and continue to lead the market in this space.”

Ampere predicts that 19.3% of Western European users will sign up to an ad-supported tier by 2027, with most of them coming from Netflix’s existing customer base. The analyst company also believes subscriptions for the ad-supported service will grow at a rate 1.8% above an SVOD-only model, earning $2.2B more than it would have done without the ad-supported tier, by 2027. This will be driven by an ARPU uplift “combined with a modest increase in the overall subscriber base.”

According to Ampere, the 2023 ARPU for Netflix in Western Europe will be 4.9% higher than without the ad-supported tier, with this increasing to 8.6% by 2027.

Ampere Analysis said: “Western European viewers have the highest price sensitivity among Netflix’s customers which, combined with relatively high advertising rates on a Cost per Thousand (CPM) basis, makes advertising in the region a strong opportunity for the streaming giant.”

Disney also revealed a slate of subscription plans for the Disney Bundle, which includes Hulu and ESPN+. Customers opting for the ad-supported Disney+ and Hulu bundle, will pay $9.99 per month; the inclusion of the ad-supported ESPN+ service into the bundle raises the price to $13.99. For existing customers, the ad-free bundle of Disney+, Hulu and ESPN+ services, will cost $14.99 per month, while new customers will pay $19.99.

Kareem Daniel, Chairman, Disney Media & Entertainment Distribution, said: “With our new ad-supported Disney+ offering and an expanded lineup of plans across our entire streaming portfolio, we will be providing greater consumer choice at a variety of price points to cater to the diverse needs of our viewers and appeal to an even broader audience.

“Disney+, Hulu, and ESPN+ feature unparalleled content and viewing experiences and offer the best value in streaming today, with over 100,000 movie titles, TV episodes, original shows, sports and live events collectively.”

Independent research boutique MoffetNathanson predicts that, in 2025, 70% of Disney+’s forecast 53 million U.S. subscribers will be on an ad-supported tier.

Based on its own research, Comcast recommends that 20-30% of overall multi-screen ad spend should be dedicated to advertising on streaming services (including FAST channels).

Broken down by gender, data from Nielsen’s Content Rating Database (based on Xumo – the Comcast-owned FAST service) suggests that men tend to watch more news on FAST services, while women spend a greater proportion of their viewing time watching comedy and entertainment shows.

Xumo data shows that U.S. viewers spend an average of 104 minutes daily with FAST content. Despite this, the report notes that “consumers may land in the FAST sphere without even knowing it.” Of Xumo users, 70% subscribe to Netflix, 80% subscribe to Hulu, and 65% subscribe to Amazon Prime Video.

James Rooke, President, Comcast Advertising, said: “FAST is a new and engaging way for consumers to watch and discover premium content in an environment that mimics linear TV. And because FAST services are easy and free to access without signing up, it’s becoming a valuable way for advertisers to reach audiences – especially cord cutters.

“While FAST does not replace linear TV or other streaming advertising, they certainly act as a valuable complement; the strongest media plans combine FAST and streaming with traditional TV in order to maximize reach and efficiency.”

Hastings also acknowledged the success competitors had experienced while offering an ad supported service: “It is pretty clear that it is working for Hulu, Disney is doing it, HBO did it. We don’t have any doubt that it works.”

The move comes after Netflix revealed it lost subscribers for the first time in ten years, with its total number of subscribers declining by 200,000 over Q1 2022. The fall brought the company’s total subscriber base down from 221.8 million to 221.6. The company has said it expects to lose 2 million by the end of the current quarter. In the immediate aftermath of the news, share price fell by 20%.

Netflix has attributed the drop in subscribers to increased competition, a challenging economy, the war in Ukraine, the slowing rollout of broadband, coupled with its already high levels of market penetration. According to the company, its decision to withdraw from the Russian market cost the streaming service 700,000 new subscribers.

Another factor behind the decline in subscribers emphasised by the company is the prevalence of password sharing and non-paying households having access to the service. Netflix estimates that, on top of its 222 million paying households, there are an additional 100 million non-paying. The company said: “[There] are already over 100m households that are already choosing to view the service. They love the service, we have just got to get paid at some degree for them.”

Dominic Sunnebo, Global Insight Director at Kantar – a data, insights and consulting company – believes the streaming service will find it challenging to clamp down on password sharing. He said:

“Netflix has been trialling a scheme for monetising password sharing in South America, and suggested that up to 100m HHs gain access to Netflix via this method.

It’s a big number, designed to buoy worried investors, but converting even a small fraction of these to full paying customers is not an easy task, particularly so when consumers are looking for ways to save money, not spend more.

If the schemes to counter password sharing move too fast and too aggressively, it also risks alienating a potential future audience -many who password share beyond the household are not actually aware they’re breaking the terms of their subscription.”

Sunnebo believes that Netflix’s potential plans to roll out an ad supported version of the service is far more significant than its plans to stop password sharing, commenting: “If Netflix does go down this route it’s game changing, not just for Netflix and its ability to generate a very significant new revenue stream, but also for the world of advertising. Netflix has reach close to that of traditional TV in a number of major markets around the world – it’s power to enact large scale change here should not be underestimated.”

The company has now said it will also be making 4,000 series episodes available to viewers for free in the U.S., with at least 100 new movies and episodes per week. Titles added in March include Legally Blonde, Runaway Bride and Gone in Sixty Seconds. Many of the titles will be available in high definition 1080p with 5.1 surround sound audio on supported devices.  

In addition to the AVOD expansion, YouTube hopes to help viewers more easily discover titles by launching a new streamlined navigation for its CTV app, along with immersive banner art. The company cited Nielsen data which shows that, in December 2021, the online video platform reached over 135 million people on connected TVs in the United States.

Kareem Daniel, Chairman, Disney Media and Entertainment Distribution said, “Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone – consumers, advertisers, and our storytellers. More consumers will be able to access our amazing content. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families”.

Rita Ferro, President of Advertising, Disney Media and Entertainment Distribution commented, “Since its launch, advertisers have been clamoring for the opportunity to be part of Disney+ and not just because there’s a growing demand for more streaming inventory. Disney+ with advertising will offer marketers the most premium environment in streaming with our most beloved brands, Disney, Pixar, Star Wars, Marvel and National Geographic. I can’t wait to share more with advertisers at the Upfront”.

By the end of 2021, Disney+ achieved a global total of 129.8m million paying subscribers and plans to increase spend on content in Q2 2022 by as much as $1 billion, compared to the same period last year.

The rapid growth of streaming TV consumption makes it imperative that networks, studios and MVPDs have a ‘grown up’ connected TV offering – one that allows them to compete for every eyeball and ad dollar that migrates into the premium digital video environment. This means:

• Holding onto audiences, and attracting new viewers, by ensuring a consumer-friendly ad experience with modest ad loads, frequency capping and relevant ads.
• Enabling ad insertion (and targeting) at huge scale with total reliability, so that mega-events including sport and breaking news can be fully monetized.
• Maximizing the value of inventory by carefully managing direct sales with multiple programmatic demand sources.
• Effectively using audience data to achieve better targeting and a personalized ad viewing experience, even in a cookie-less world.

The pandemic accelerated all digital behaviours, including TV viewing. Mass-scale connected TV was tomorrow’s opportunity and challenge, but tomorrow arrived early. Join us live to hear how networks, studios and distributors can rethink the ad-supported TV model and ready themselves for connected TV primetime.

Register here.

This webcast explores:

• What a holistic ad performance and revenue strategy looks like, and how you find the sweet spot where ‘audience + avails = best possible yield outcome’, and how you avoid the one extra ad that loses you money, as viewers ‘tune out’.
• The potential for greater integration and synergies between SSAI and audience data and targeting capabilities –and how this could be implemented.
• How to manage ad frequency in a multi ad server (direct, programmatic, affiliate) environment and so ensure ad repetition does not degrade the ‘premium’ TV experience.
• The next steps in dynamic ad insertion, including the benefits of server-side ad insertion and client-side ad insertion, and how these can be used successfully in a hybrid model.
• The potential for a multi-DAI vendor strategy (similar to multi-CDN strategies) and how this could influence ad delivery performance and costs.
• How to manage multiple inventory owners within the same video session using an understanding of who has the ‘right to sell’, plus the ad routing and decisioning processes that support sales business rules.
• The special considerations when streaming ad-supported content into MVPD set-top boxes.
• How to monitor and diagnose the causes of ad errors, and so increase ad delivery reliability.
• How organizations are managing ad insertion for very large scale events, including the implications for ad insertion infrastructure