Friday, May 24, 2024

Roku-MLB Highlights Free Sports Streaming as Fubo, Others Dive in

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Free TV still has appeal for sports, it seems. Roku’s announcement this week that it will show the Sunday morning MLB games at no charge on its Roku Channel highlights the seemingly sudden move of sports into the explosion of FAST channels—free, ad-supported streaming television.

Financial details of the Roku deal aren’t disclosed yet, so it’s unclear if the publicly traded company is paying more or less than the $60 million Peacock paid to have Sunday morning baseball behind its paywall. But regardless, it’s a strong vote of confidence in FAST. The number of channels have exploded in the U.S., more than tripling to 1,900 over the past three years, according to a report from Samsung. It, like other TV manufacturers, is one of the main hosts of FAST channels, carrying hundreds of free channels on its sets, from the quirky—one station is just a loop of a burning fireplace—to mainstream, such as NBC News.

Because of—or perhaps in spite of—the proliferation of channels, FAST viewership is booming. The Roku Channel, a collection of more than 400 stations where MLB games will sit, is now the third-most used app on Roku. It looks to be the pathway for growth for the business, which now sees 80% of its revenue from ad sales, after years of mainly making money selling video streaming hardware. More FAST channels probably allow Roku to take a larger cut of ad revenue it splits with channel owners. “The glimmer of a premium FAST network with in-house ad tech stack is intriguing,” said Jefferies & Co. analyst Andrew Uerkwitz in a note on the company two weeks ago.

Roku isn’t the only one seeing success with free TV. Sports-centric bundler Fubo has found that its FAST offerings along with cable channels behind its paywall accounted for 9% of all its viewing in the first quarter. “It’s turning into a pretty good profit driver for the company,” CFO John Janedis said on a call with analysts two weeks ago.

If the behind the paywall works, then in front of it should be even better: In the next few days Fubo will announce a free tier of FAST channels—but just for lapsed subscribers and free trial customers, at least at first. Fubo will feature 25 sports stations, including Real Madrid TV, Pickleball TV, Surfer and World Poker Tour, according to the company.

Also launching its own free network this week is FanDuel. FanDuel TV Extra will stream live basketball from leagues in China, Germany and Turkey, soccer from South Korea, PDC darts and poker from PokerStars. Because of that, FanDuel says the channel will have the most live sports matches in the free streaming sector.

Piling into the free sports area this week as well is former NFL and WWE pro Shawne Merriman, who announced his own platform for FAST sports-centric channels, Lights Out Sports. The platform launches with streams of 10 networks, including backyard fight club Streetbeefs, Glory Kickboxing and Lights Out Xtreme Fighting, the MMA league Merriman owns.

“In the FAST space these niche sports are getting kind of lost in the shuffle,” Merriman said on a phone call. “My number one focus is being an aggregator of these really well-thought out and well-done channels.”

According to Merriman, the technical task of starting a FAST network is relatively simple, thanks to an ecosystem that has sprung up to support FAST creation: One company handles building the user interface, others handle the nitty gritty of storage and video streaming, while the stations themselves on his platform take the lead in selling their ad capacity. To date, he hasn’t even brought in investment partners. “It’s just me,” he said. “My job is to make sure we have traction, creating eyeballs.”

Merriman’s experience with outsourcing much of a FAST network’s creation isn’t unusual: According to Sportico’s sister publication IndieWire, a FAST network could go from conception to broadcasting in about a week, though a month is more realistic.

Part of the explosion of FAST networks may be the technical ease, but it’s mainly because they appear to be highly profitable, thanks to advertising. The average revenue per viewer is expected to be $9.01 this year, according to Decenter Ads, a programmatic ad platform. The world ad market for FAST ads should top $9 billion this year, dominated by U.S. spending, according to another firm, U.K. analyst Omdia. Two years ago, global FAST ad revenue was less than half that.

Expect the ad growth to continue, since the consumer privacy movement that gutted mobile ad targeting has bypassed smart TVs. Applovin, a $28 billion publicly traded marketing specialist that was at the vanguard of targeted ads on mobile, sees connected TVs as its growth area as it refocuses after being handcuffed by mobile phone restrictions.

How much will that means for sports? To date, it hasn’t been a heavyweight in FAST. Comprehensive data on all 1,900 networks is hard to find, but indications are that the number of sports channels have been roughly level between 2021 and the start of this year, somewhere around 100 channels, or 7% of all offerings, according to various sources.

Whether the new wave of sports channels finds an audience is another matter. Most FAST viewing is dominated by a handful of players. In a November presentation to a UK media conference, Omdia senior director Maria Rua Aguete noted that five channels from Paramount—four Pluto-branded channels and Star Trek—account for 20% of all U.S. FAST viewership. The top 20 channels account for about half of all FAST viewing, she said. “The importance of offering strong IP—such as Star Trek—on an exclusive basis grows,” she said.

That’s sound like a world where sports has gone before.

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