Samsung unchaining TV Plus. Expect other OEMs to follow.
Samsung is rumored to be talking to competitors about making TV Plus available on their TVs. The move is evolutionary for TV Plus, making sense while risking little. Expect other smart TV OEMs to follow suit.
Samsung is looking to distribute Samsung TV Plus, its popular FAST service, through non-Samsung devices. According to Lowpass, the South Korean electronics giant has approached several TV manufacturers, including Chinese rival TCL, about allowing TV Plus on their smart TVs.
TV Plus is already available to competitors via Tizen
The move to put TV Plus on TVs from other manufacturers is not a new one. Last year, the company announced that it would begin to license its smart TV operating system, Tizen, to other TV makers. As part of the licensing agreement, OEMs would also gain access to Samsung TV Plus. Previously, Samsung made the service available to users through a browser. However, if the Lowpass report is correct, it is the first time Samsung has shown the desire to unbundle the service from its devices and TV OS completely and put it on competitor products powered by non-Samsung TV OSs.
Samsung is leaning into the TV Plus opportunity
TV Plus has become an increasing focus of Samsung, shifting it to be more globally focused. Last year, the company expanded the availability of channels through the service to more than 1800 worldwide, with over 220 available in the US. It has also focused on launching channels that leverage premium TV content with partners like the BBC, A+E Networks, and EW Scripps. It has even revamped the TV Plus logo’s design to reflect the global aspirations of the service.
The focus on premium content appears to be paying off. Samsung told advertisers recently that TV Plus reached 17.4 million monthly active devices in the US. It also says it streamed 3 billion hours of content in the year to August 2022 to TV Plus users across the globe.
TV Plus needs to be set free of Samsung hardware
Data from Roku shows that the decision to distribute Samsung TV Plus broadly is solid. To a large extent, The Roku Channel is the company’s engine for success. TRC is largely responsible for Platform sales revenue growing from $582 million in Q3 2021 to $670 million in Q3 2022. The Platform business delivers 90% of Roku’s revenue and 100% of its gross profit. The Platform business also delivers gross profit margins in the 50-60% range, far higher than hardware sales.
To maximize the value of the content in The Roku Channel, the company makes it available on competitor TV OSs including Samsung’s Tizen and Amazon’s Fire TV. Given the level of investment Samsung is making in TV Plus, following Roku’s example and broadening the service distribution will help maximize the return on investment.
The risks in setting TV Plus free are minimal
Is there a risk in distributing TV Plus on competitor devices? Hardware vendors may think that their FAST services help differentiate their smart TVs from the competition. However, the primary decision criteria for buying a TV remain the same as they have been for a decade or more: size, price, and picture quality. A TV purchaser likely doesn’t give a moment’s thought to the content available through a built-in FAST service between one TV brand and another.
And there is a risk in reserving the FAST service to only a manufacturer’s devices. Generally, people are not very loyal to a TV brand. That means a TV in a bedroom is liable to be a different brand to one in the den or living room. If they can’t use the same FAST service on the TV in the den and the bedroom, they are more likely to switch to a service that is available on both.
The bottom line
The decision to free a FAST service from a manufacturer’s smart TVs says a lot about how the company views itself.
Reserving a FAST service for its devices shows that a company is still a TV manufacturer at the core.
Delivering a FAST service on competitor devices and TV OSs shows a company views itself more as a TV experience provider.
Given the attractive margins offered by advertising versus hardware sales, expect more manufacturers – like LG and Vizio – to unshackle their built-in FAST services from their smart TVs and distribute them more broadly.
Omdia: FAST revenues to hit US$12bn by 2027
Free Ad-Supported Television (FAST) revenues are set to reach $12bn in 2027 according to research from Omdia, but cutting through the 1,500+ existing channels will provide the biggest challenge for operators as the market grows.
The FAST market has boomed in the US over the past two years, as operators such as Samsung, Roku, LG Channels and Paramount’s Pluto TV have secured rapid consumer uptake. Rights holders such as Banijay, ITV Studios and BBC Studios have also been increasing their activities by rolling out new channels.
This growth will continue in the US, where revenues are expected to surpass $10bn by 2027, while in Europe revenues will exceed $1bn by 2027.
The findings from Omdia also found that FAST channel revenues in the US grew by almost 20 times between 2019 and 2022, and will almost triple between 2022 and 2027.
At present, US revenues account for amost 90% of the global FAST channel market value, which Omdia estimates is just under $4bn. By 2027, the US FAST channel market will exceed $10bn in revenue, but the fastest growth will come from countries outside of the States.
Source: Digital TV Europe
Understand the streaming landscape in this weekly data snapshot series provided by Parrot Analytics. With earnings season kicking off last week and streamers' financials under the scrutiny of Wall Street, this week's chart takes a look at how global demand for streaming originals stacked up last quarter.
Key Findings Include
- In Q4 2022, Netflix’s global share of demand for original TV content fell below 40% for the first time ever, dropping to 39.6%. It still has a leading position in terms of global demand for its original series, more than three times as much as the platform with the next largest share of demand globally, Amazon Prime Video
- Disney+’s demand share grew almost a full percentage point in Q4 2022, up to 10.2%. This is the highest ever quarterly global demand share for Disney+, and the first time the platform has cracked double digits.
- There has been continued growth in demand for original streaming content not from one of these seven platforms. The share of demand for content from other platforms reached 18.4% as niche and market-specific streaming platforms continue to proliferate around the world.
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