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Linear Channels on SVOD Services? It’s Only a Matter of Time (Wolk)

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(Image credit: Broadcast Bridge)

One of the more surprising findings of our upcoming special report on the FAST ecosystem was the widely held assumption that linear channels of the sort frequently referred to as “FAST channels” would also be showing up on the “Big 8” SVOD services as a way to increase engagement with their library content.

The rationale can be summed up in this quote, a variation of which I heard from at least a half-dozen executives I spoke with: “Why make someone who regularly binges on The Office pick a new episode every time they turn on the TV when you can give them an entire channel?”

Teasing out that notion, it seems there is a general consensus that the discovery engines on the major subscription video-on-demand (SVOD) services steer viewers toward new original programming rather than library classics.

Thus viewers are not aware of the extent of the service’s library content and/or feel that they should really only be watching originals. Either way ,it leads to greater churn, as viewers come in, watch one or two original series and then decide they have already watched everything that interests them on the service.

Standing up linear channels can solve this by creating a whole “live” section on the app for viewers to explore that will give them all of the newly created linear channels along with news and sports. 

In addition to giving viewers a reason to explore the depths of the library, the linear channels give them “permission” to watch shows other than high-profile originals, which will also help them to justify the cost of the service. 

As with the free ad-supported TV channels (FASTs), there’s also the “analysis paralysis” factor: having to decide what to watch every single time you turn on the TV is not something most people look forward to, and giving them the option to engage in lean-back frictionless linear viewing is likely to prove quite popular.

This also dovetails with the industry’s cooling on the appeal of all-at-once releases. The consensus here seems to be that in a hyper-competitive environment, it is much easier to promote a series that rolls out over the course of several months and to build momentum for it along the way. It’s also harder, services are finding out, to keep viewers engaged for 10 or 12 hours straight when their competitors are rolling out (and heavily promoting) new episodes every week that are garnering the lion’s share of water-cooler chatter.

Linear Channels Mean More Ad Slots

User experience aside, there’s a business reason for rolling out linear channels as well.

One of the key issues as big brands shift more and more of their budgets over to streaming is that there is far less inventory. Both the SVOD services and the FASTs have considerably lower ad loads than broadcast and cable, which means there isn’t much inventory to go around.

It is widely assumed that services like Netflix and Disney will have notably low ad loads on their originals, possibly limiting ads to preroll only. That makes sense in that their original series are not cut to accommodate traditional  ad breaks the way broadcast and cable shows are.

To make up for these limited ad slots however, the SVOD services can introduce slightly higher ad loads on their linear channels, inserting ads in their library shows in all the right places, thus increasing the amount of inventory on their services and on streaming overall.

While the linear channels are unlikely to command the same CPMs as the original series, they would provide brands with a way to reach viewers they are missing on linear with the degree of frequency needed to make a campaign effective.

NBCU and Paramount Lead the Way

SVOD services affiliated with a broadcast network or studio with a deep library of unique programming are in a great spot here as they not only have more programming to put into linear channels, but more unique programming as well.

Which is no doubt why they are already on board: NBCU’s Peacock, which has three tiers (ad-free and ad-supported subscription plus a FAST) has had linear channels as part of its offering since it launched in July 2020. 

Paramount Plus, which has the vast and popular libraries from CBS, MTV, VH1, Nickelodeon, BET, Comedy Central and Showtime, rolled out linear channels in December 2021.

Their success is why the industry consensus is that it is only a matter of time till the other services follow suit. Linear channels are a successful formula, one that, against all odds, seems to be of value yet again here in the Streaming Age. ▪️

Alan Wolk
Alan Wolk

Alan Wolk is the co-founder and lead analyst for media consultancy TV[R]EV