If David Zaslav knows anything, it’s lean-back, pre-programmed, ad-supported TV channels. So it only makes sense for his Warner Bros. Discovery to go all-in on FAST, otherwise known as free, ad-supported streaming television. Given his recent high-profile scrubbing of HBO Max’s library, most notably with “Westworld,” consider it the method to his madness.
Warner Bros. Discovery is going at FAST, well, fast. On the company’s most recent quarterly earnings call, Zaslav said WBD “will be aggressively attacking the AVOD market with our own FAST offering in 2023.” Between that and the pending combination of HBO Max and Discovery+, WBD engineers should probably plan to work through the holidays.
Zaslav sees his company’s giant film and TV library as providing a “unique opportunity to increase our addressable market and drive real value.” Given the April mega-merger between Discovery and AT&T’s WarnerMedia assets, he’s right.
There’s “a huge amount of content that’s not even on [HBO Max/Discovery+] that’s sitting with us that hasn’t been put to monetize in the marketplace. Some of that we will sell, which we’ve talked about, and we’ve started to sell,” Zaslav said on the third-quarter earnings call. “But we have the ability on the FAST side to build a service without buying content. Most of the players in that space are out buying content and then looking to sell that content and create a vig, effectively, where they get a return on that content based on what they spent on it.”
The addition of FAST to his existing AVOD/SVOD hybrid platforms (which, again, will become one in the spring) makes Warner Bros. Discovery a “full service,” in Zaslav’s words. It’s an increasingly necessary concept in a challenging macroeconomic environment, particularly outside the U.S.
“All of the big services will need a FAST channel— not so much in the U.S,” said TVREV co-founder and lead analyst Alan Wolk, who coined the FAST acronym in 2018. Where much of the world’s population lives, “people just don’t have money for subscription-TV services,” he told IndieWire. In those often-underdeveloped countries, they “expect heavier ad loads” and “banner ads at the bottom of the screen while the show is playing.” For free access, it’s a well-tolerated trade-off.
There’s also a “flywheel” effect in which a free tier can convert users to paid subscriptions, he said. “Westworld,” in this case, could be a “lure” for HBO Max. That’s why “Westworld,” the high-budget, high-concept, highly rated (for a time!) HBO series with an incredible Season 1 and three more seasons after that, will soon be a giveaway.
“In the past, a show like that would never have been shown against advertising,” Colin Dixon, founder and chief analyst of NScreenMedia, told IndieWire in a separate phone call. “So it’s a pretty big move.”
Big, but logical. “Once a show has been sitting in a library for a number of years — no matter how good it is — it’s not going to be watched a lot,” Dixon said. “That sort of show, there’s definitely a lot of room to monetize it in other ways.”
John P. Johnson/HBO
The dystopian-future, sci-fi aspect of “Westworld” has broad appeal, Wolk said, adding that Warner Bros. Discovery probably felt “the type of people that watch a FAST service would be into something like this.” There also could have been contractual reasons it made sense.
So FAST is no longer just the cast-off crap that nobody otherwise wants. That’s why HBO Max can afford to lose a “Westworld” — even a few of them.
Wolk thinks cutting content from HBO Max won’t devalue the service, “with the giant honking asterisk that the (remaining) shows have to be good,” he said. HBO and HBO Max combined for 14 Golden Globes nominations on Monday, tying Netflix with the most nods thanks to “The White Lotus,” “House of the Dragon,” and “Hacks.” So yeah, we’d say the quality remains.
If you think free “Westworld” is a shocker, Dixon wouldn’t be surprised if HBO’s crown-jewel series “The Sopranos” shows up in the forthcoming FAST service — at least for a little while. Shows with high episode counts are particularly good for FAST, since these channels require thousands of hours of programming.
“Being $50 billion in debt focuses your attention on revenue generation like you wouldn’t believe,” Dixon said of his all-bets-are-off prediction. (A great line, but technically the company’s net debt is currently just $47 billion.)
Courtesy of HBO
But what will WBD FAST look like, anyway? Dixon believes Warner Bros. Discovery’s FAST app will be “a separate service” rather than a free tier within the Max/Discovery+ app, similar to Peacock’s most basic option. A standalone service, Wolk said, would shield potential consumers from potential confusion. It would also be more expensive, which is potentially problematic for a costs-obsessed company. His best guess is WBD FAST will go standalone and the service primarily will consist of Discovery programming.
If it does, Zaslav should buy “every single interesting FAST channel out there,” Dixon said. Personally, he’d recommend adding a FAST tier to the core app and bring every possible customer into the overall ecosystem. (He believes Paramount Global-owned Pluto TV, one of the most successful FAST players, will eventually merge with the company’s SVOD/AVOD hybrid service Paramount+.)
Warner Bros. Discovery could also package programming and license FAST channels to other services, like a Pluto, Dixon said. “We’re in a world now where, to optimally monetize content, you need to be taking advantage of all of the [revenue streams] that are out there.”
You reading, Netflix? Both Wolk and Dixon believe Netflix will join Warner Bros. Discovery in the FAST space. Dixon believes it could happen as soon as next year, while Wolk thinks 2024 or ’25 is more likely. Even with its advertising tier and password-sharing crackdown program, Netflix still has a few tricks up its sleeve to reach its revenue potential.