Broadcasters Caught Between Pay TV and CTV

Connected TV CTV manufacturers like Samsung LG and VIZIO are accelerating the pay TV cordcutting trend by offering builtin FAST services with their productsamp160FAST services offer a linear viewing experience that39s similar to traditional pay TV but with fewer ads for now and no monthly subscription fees By simply connecting a CTV to their home WiFi consumers can instantly access FAST services like Samsung TV WatchFree and LG Channels to stream hundreds of channels without ever purchasing a pay TV subscriptionFAST is a relatively new business model that has primarily relied on monetizing niche and nostalgic content eg old movies and game shows travel and cooking shows crime drama and reality TV reruns niche sports etc while live sporting events and local news have been mainstays on pay TVBut as FAST audiences have grown and cable audiences declined in recent years some broadcasting networks and ownership groups are making deals with CTVOEM providers to distribute local channels on FAST services Samsung TV Plus for example now distributes more than 80 local news channels for major broadcasting networks and broadcast station ownership groupsThe availability of local news content on FAST services isn39t great news for MVPDs who have relied on local news content as a key differentiator during the rise of OTT streaming But from the broadcaster39s perspective pay TV viewership is declining and licensing local news channels to growing FAST services means reaching an everwidening audience and valuable opportunities to build trust with younger viewersAlthough many believe that FAST is poised to be the future of linear television several broadcasters are realizing that it may be too early and slightly controversial to license valuable local news content to FAST services Licensing to FAST services might provide more viewers but broadcasters could be harming their relationships with Pay TV operators and their bottom lineHere39s whyAs pay TV subscribers have fallen at a steady pace over the past decade broadcasters have nevertheless consistently negotiated rate increases for the retransmission of their content These lucrative retransmission fees are paid by the cable and satellite MVPDs that distribute their programming to customersBroadcast retransmission fees oftentimes equate to more than half of broadcasters39 annual revenues and those fees represent substantially more than the share of ad revenue they might receive by way of a FASTlicensing agreement At the same time offering local news content for quotfreequot on a FAST service undermines the value of the same content on pay TV making it more challenging for broadcasters to negotiate retransmission fee increasesIf the MVPDs aren39t getting exclusive access to that content if it39s being offered to audiences for free on a FAST service how can broadcasters claim that those channels and the corresponding content are still bringing the same value to the pay TV ecosystemAnd can broadcasters afford to risk losing out on those retransmission fees when they know that ad revenue from FAST services won39t make up the shortfall anytime soonAnother challenge for broadcasters licensing to FAST services has been the complexity and volatility of OTT video licensing agreements Network finance teams are accustomed to linear TV licensing agreements where license fees are typically based on the number of monthly subscribers that subscribe to an MVPD39s service Although subscribers may be declining at a steady pace it is nevertheless a much more predictive and stable revenue stream that flows from the licensee to the content owner Licensing to OTT streaming platforms brings a new set of challenges for broadcasters including more agreements to manage shorter timelines a lack of reporting standardization across distributor partners and even complex quotrole reversalquot deals where a broadcaster pays an MVPD for carriage on that distributor39s digital platformContent owners committed to going digital can deal with the complexity of OTT license management by adopting new technologies to automate license management workflows and manage OTT platform data Today39s AIpowered tools can help content owners normalize OTT data track distributor compliance with licensing terms and accurately forecast revenue but these tools cannot make up for lost retransmission fees from MVPDsIf licensing to FAST services is cannibalizing pay TV subscribers and impacting retransmission fee revenue perhaps the best option for some broadcasters may be to stop licensing to FAST services and team up with MVPDs to keep local news on pay TV and protect their shared interests by preserving valuable pay TV subscribers for as long as possibleThis column was written by Karin Bleiler Executive Vice President and General Manger of Revenue Solutions at SymphonyAI MediaClick the social buttons above or below to share this content with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

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Broadcasters Caught Between Pay TV and CTV

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Broadcasters Caught Between Pay TV and CTV

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