The sustainability of Streaming TV, FAST Channels, and AVOD (also known as FAST) hinges on the principle that operational costs must be eclipsed by profits. Currently, this balance is not being met.
The crux of the issue with Streaming TV’s viability as a business lies not in technology but in a significant inefficiency in monetizing audiences. To elaborate, the advertising process involves a chain of 4-7 companies, each taking a cut, which results in the platform and content owner receiving a smaller share of ad revenue compared to platforms like YouTube.
Consider the number of intermediaries required to sell a video advertisement:
For ad-supported viewing, advertisements are interspersed within linear TV channels or content approximately every 12 minutes, with the duration of ads varying based on content quality or audience demographics, utilizing SSAI for linear channels and typically client-side advertising for on-demand content.
What is the programmatic ad selling process in Connected TV
These ads are dispatched through digital agency networks and Demand Side Platforms (DSP) via the Supply Side Platform (SSP), enabling advertisers to align with content channels. Ad spots are auctioned off, with bids based on the viewer’s location, the content viewed, and other demographic data. The highest bidder secures the spot, and the ad is aired, with this entire auction process unfolding in mere fractions of a second for each ad slot and viewer.
However, this system is flawed, not due to technological limitations but because it involves numerous steps and entities, each claiming a portion of the revenue. This leaves a meager share for the most significant investor in the ecosystem—the content creator or owner—sometimes as little as one-sixth of the generated revenue and one-tenth of the potential earnings.
The way to move forward is as a single platform right!
Platforms that function as integrated entities have the potential to rectify this issue. YouTube, Vimeo, and Kapang are examples, with the latter focusing on FAST Channel and premium content monetization. Kapang’s adX product aims to return two-thirds of the revenue to the content owner or broadcaster, addressing the inefficiency in the current system.
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