Omdia’s Tim Westcott explains why FAST channels go hand-in-hand with children’s programming, takes a look at those operators who have already recognised the opportunities in this space and explores the different models being used.
Some time ago, we surveyed the children’s programming on UK TV channels for a presentation. One of the UK public service channels was scheduling episodes of the same pre-school show around the clock. At the time, this seemed to be a waste of valuable broadcast spectrum, but it now turns out that channel was just a few years ahead of its time.
The rise of FAST channels has been one of the talking points of the last year or so in media, even though the general concept has been around for longer. The acronym stands for free ad-supported streaming television. Unlike traditional linear ad-funded channels, FAST channels are fully distributed via digital networks that are fully addressable and are therefore perfectly suited to targeted advertising.
FAST platforms include PlutoTV, part of the Paramount empire, consumer electronics manufacturers LG, Roku and Samsung (the growth of smart TVs has been a key dynamic in the rise of FAST) and newcomers like Plex and Rlaxx.
Channels available on FAST services are a mix of brands that have moved from traditional TV distribution platforms and channels that originated as on-demand services (usually YouTube in the children’s space). Many are single-IP channels: Nickelodeon’s archive is particularly prominent in FAST, with SpongeBob SquarePants, iCarly, Dora The Explorer and Blue’s Clues channels among a raft of others.
Crucially, channels are curated rather than being algorithm driven. In many ways, they tap into a consumer preference for passive, ‘lean-back’ viewing as an alternative to on-demand services. The children’s audience – generally more prone to watch back-to-back episodes of the same show on repeat (as parents of young children will wearily attest) – is perfectly suited to FAST.
Omdia’s snapshot of FAST channels in Q1 this year identified 85 children’s FAST channels in the US, 53 in Germany and 39 in the UK. The pre-eminence of the US is no surprise given that it is well in advance of other markets in terms of development, with the US and Canada combined accounting for 90% of global FAST channel ad revenues.
The main platform for the genre in the US is PlutoTV, with Nick-based channels featuring prominently, as well as Moonbug’s Little Baby Bum, the Lego Channel and Yu-Gi-Oh. Roku is also a key player in the US with 26 children’s channels, while LG has 24. Some 23 of the children’s channels are single-IP – the others feature a mixture of content.
The next largest FAST markets outside the US are Germany and the UK, and here Pluto TV is also the leading player in children’s FAST, with 30 channels in Germany and 10 in the UK. Rakuten TV is active in both countries, with 10 channels in the UK and seven in Germany, and Samsung has seven children’s FAST channels in both countries.
After Paramount, the most active children’s channel owners in the FAST channel space are WildBrain, Toon Goggles, Moonbug and Mattel. These are mostly companies that have a sizeable archive of programming available, ideally with an established audience and strong branding. Channel operators have told us that 100-150 hours of content is a minimum for a FAST channel. The schedule also needs to be refreshed, and many single-IP channels will have a limited shelf life.
There are a variety of business models for FAST channels. Typically, content owners would share revenues from their channel with the platform owner (with another cut going to the technology partner). The split is usually 60/40 in favour of the channel provider. The other major model is inventory share, where the channel owner sells some of the advertising itself. A less frequent model sees the platform paying an annual fee to the content owner and keeping 100% of ad revenues.
While children’s channels certainly have a niche on FAST TV, the model will not work for all types of content and the economics certainly do not support original production on any but the lowest of budgets. Omdia’s consumer research also indicates that while the heaviest users of FAST skew young, families with children under-index as FAST users. Children’s channels account for just 5% of the overall FAST channel offer in the US and 7% in the UK.
Tim Westcott is senior principal analyst, digital content & channels, at research powerhouse Omdia. TBI and Omdia are both owned by Informa.
Join us in-person at the Media & Entertainment Leaders Summit on 7 November in London for more in-depth analysis on FAST. For tickets, visit here.