Consolidation and the accelerating push into advertising are rapidly turning the power structure behind streaming into something more resembling traditional television, or the monopolistic tech sector, than some radical new business model.
One example: New requirements being implemented by Roku and other major connected platform players for free, ad-supported streaming service (FAST) partners, at the same time the distribution giants move to create their own FASTs.
Roku has informed some of its FAST partners that it will reduce their cut of advertising revenue and require that they begin using its tech stack for some functions.
The changes include cutting FASTs’ net ad revenue share on both video-on-demand and linear content from 60% to 55%, according to Protocol sources.
They also include requiring linear channel providers to use Roku’s content delivery network (CDN) services and ad insertion technology, rather than third-party solutions providers or buy resources from vendors like Amazon’s AWS.
Roku began transitioning some partners to its platform last month, and will phase the others in in the months ahead.
A 55% revenue cut is said to be more favorable than the terms of some other distribution platforms, but still a blow for the free content providers, given Roku’s scale.
Roku says its new system will help ensure the best-possible streaming experience for customers by “allowing for easier delivery of content and improved quality.” And some suggest that the mandatory tech adoption is largely aimed at preventing viewing-surge outages during live events, including coverage of the upcoming midterm elections.
But publishers say Roku currently lacks the capabilities to report some data with the granularity and speed they need to program content and provide specific data, including numbers of ads served during programs, that is required by some revenue-sharing contracts with content providers. Roku says it will work with partners to ensure the best business outcomes for both, as well as the best experience for customers.
Samsung is also pushing its content partners to adopt its CDN, but offering more access to data and providing a longer window for making the transition, sources told Protocol.
Meanwhile, Roku, Samsung, Pluto and Vizio have all begun launching their own FASTs.
And some publishers fear that Roku will soon expand its so-far -limited owned linear channels — perhaps using “some of the data it isn’t sharing with partners” to inform channel and programming development.
Protocol sources assert that the developing scenario exemplifies “classic big platform bad behavior,” amounting to acting as “advantaged competitors.”
One thing seems clear: With trillions at stake over the next decade, and “fragmentation” viewed as advertisers’ biggest obstacle, the rules of engagement are going to be dictated and dominated by a relatively small number of aggressive, cross-platform juggernauts.
But there’s at least one big difference with the old power structure: It’s underpinned by the massively more intrusive advertising targeting practices now possible thanks to algorithms, machine learning and AI, among other “advances,” combined with no meaningful constraints on data collection or use.