With a highly competitive streaming landscape, many content brands are adopting hybrid business models. Disney+ and Netflix now offer lower-priced ad-supported tiers, and Paramount+ and Peacock offer FAST services to deliver real-time streaming of channel-based linear content. Notably, AVOD and FAST channels serve as growth strategies for many content providers in that they offer low-cost options that attract viewers.
A select number of top services—such as Pluto, Tubi, Peacock, and The Roku Channel—currently dominate the market. However, given that there are now more than 300 OTT channels, how can streaming channels differentiate to appeal to viewers and make inroads into the growing market? Quickplay, an OTT cloud business that enables personalization for sports, media, and entertainment, partnered with the research firm Park Associates to explore this question. Their report, Personalized Virtual Channels: Maximizing FAST Engagement, examines new ways for media companies to maximize the monetization of consumer viewership, particularly through the promise of personalization.
Hybrid streaming marketplace
As cord-cutting continues, and internet-connected device penetration of Smart TVs and media devices grows, OTT usage is the new norm for consumers. Eight in ten (80%) U.S. internet households subscribe to an OTT video service, 49% subscribe to four or more, and 33% use an ad-supported OTT service in the last 30 days.
As reported in DCN’s The Rise of and Best Practices for AVOD and FAST, the adoption of AVOD and FAST grew faster (55%) compared to SVOD (28%). Park Associates identifies “free cost” as the top reason consumers use AVOD (49%), followed by “content consumers like” (31%).
Consumers are attracted to the free offering of AVOD and FAST, with 38% stating that they do not mind viewing advertising on a free service. However, 41% of ad-supported customers do say that they dislike viewing video content with commercials, and 40% are dissatisfied with the frequency of ads.
Personalized virtual channels
First-party data collection is already in place with many content services requiring users to opt-in for data collection in exchange for a more personalized user experience. While other providers may not require an account, they often ask consumers to register to offer personalized favorite channels and recommendations. Content preferences and location (i.e., zip code) feed content recommendations – think local news, weather, and sports.
The report recommends combining cloud-based technology and programmatic operations to allow owned and operated brands to offer ad-supported personalized virtual channels. FAST platforms are cloud-based. They do not have channel or format restrictions and are easily adaptable for personalized virtual channels.
For the content provider, personalized virtual channels maximize the lifetime value of content libraries by extending content shelf life. Further, reusing existing libraries and programming rights can also help offset content acquisition and encoding expenses. For the consumer, personalized virtual channels deliver a lean-back experience while enhancing individual content preferences in a stress-free navigation environment.
Importantly, the data containing information on viewer preferences and habits allows virtual FAST services to deliver progressively smarter and more relevant content. The more engaged the viewer, the higher retention and, ultimately, the more effective advertising. It’s a win-win for all involved in the value exchange.
Personalized virtual channels’ delivery of personally relevant content yields higher content engagement and lower viewer turnover. They offer a better viewing experience for consumers while delivering new opportunities to monetize viewership.