Warner Bros. Discovery is exploring the option to launch a free ad-supported streaming TV (FAST) service, executives said Thursday during the company’s second quarter earnings call.
The disclosure came as WBD officially announced plans for a new SVOD service that combines the content of Discovery+ and HBO Max under one (yet to be named) brand and platform, with a U.S. launch expected in the summer of 2023.
A FAST service would come later down the line, once the new SVOD is firmly established, serving as an entry point to the company’s premium service, according to WBD CEO David Zaslav.
“Providing consumers with a range of entertainment options will maximize our reach and financial returns,” said WBD CEO and President of Global Streaming and Games JB Perrette on the earnings call, with first priority on the combined SVOD offering. “But as you heard we’ve also begun to explore options of how best to reach consumers in the free ad-supported streaming space.”
A free ad-supported service would be distinct from the SVOD service, which is expected to offer both an ad-free and ad-lite tier (more details here).
WBD currently licenses its library to others, but Perrette said the they “will assess how best to play in this growing business as the model evolves from free-to-air linear to free-to-view streaming.”
The content that would be on a FAST service would also be distinct from the premium programming on the forthcoming SVOD, Perrette noted.
“With over 100,000 titles or episodes across our combined portfolio there’s a lot of content that wouldn’t necessarily make sense in a premium product that might make sense in a FAST,” he said. As for markets, WBD is currently assessing over the next few months as to where there’s the most opportunity and will share more details at a later time.
The FAST market has been growing quickly, with a recent report from Comcast saying FAST penetration among households more than doubled year over year in 2021, making it the fastest growing streaming tier. Six out of 10 households with a connected TV are turning to FAST services, either exclusively or to complement other services.
Warner Bros. Discovery potentially getting into the FAST game would mark the latest media company to make the foray. Current media company-owned FAST services include Paramount’s Pluto TV, NBCUniversal’s Peacock, Comcast’s Xumo and Fox’s Tubi.
In a recent primer report on FASTs by TVREV, lead analyst Alan Wolk predicted such a move – not only at WBD, but all of the current major streaming services. He wrote that the big eight U.S.-based streaming services “will all turn to some version of the three-tier system…where each company maintains an ad-free subscription service, an ad-supported subscription service and a FAST.”
WBD’s comments today show it’s the latest to mull that strategy.
Some may take the route of keeping all three rolled into one branded app, such as Peacock, Wolk noted, while others would keep a “separate-but-connected” FAST service like Paramount’s Pluto TV.
“In either case, the goal will be to create the proverbial flywheel effect by using the FAST service to promote original programming on the subscription services so that viewers sign up…while at the same time keeping the FAST original and engaging so that viewers see it as a destination in its own right and using the subscription service and/or the broadcast network to g[a]in awareness,” wrote Wolk.
In laying out advantages media company-owned FASTs, the report pointed to access to exclusive content from parent companies as the biggest advantage. For example, a FAST could help promote originals on the parent-company app with a teaser, or networks could place older seasons of popular originals on FASTs to encourage viewers to subscribe for the current season, the report noted.
“At a time when there’s an assumption that most FAST services have (more or less) the same content, the availability of TV series and movies that can’t be found on other services is a huge plus,” the study authors wrote.