Kapang announces 80/20 FAST revenue share to align with the traditional broadcast model

Kapang is a Connected TV platform delivering more than 400 FAST & subscription channel services to viewers in the UK and USA using an internally developed private content distribution network (CDN), BroadcastCDN, to provide broadcast-grade encoding, delivery & monetization from an SRT/RIST live feed sent from any existing playout system.

BroadcastCDN provides a live linear & on-demand user experience that viewers demand, and advertisers embrace by providing continuity & predictability to provide a sustainable business model for FAST channels and content owners.

“Kapang announces 80/20 revenue share, releases its proprietary FAST & Connected TV technology to deliver sustainable content business models across all platforms and gifts shares to loyal broadcasters & new technology clients”

Kapang Television Services

“FAST is an acronym that stands for free ad-supported streaming TV services. Essentially, this is free to view live streaming TV without a subscription.

FAST channels extend the service of traditional linear TV channels, like cable & satellite services, to internet-connected devices, like Smart Television & Connected TV platforms, by dynamically reinserting paying ads into the would-be ad break, FAST channels can offer these streaming services at no cost to the viewer, unlike a subscription model, whilst monetizing content portfolios.” said Jamie Branson

Does the FAST Industry have problems?

Kapang has witnessed the FAST industry evolve over the last 5 years with a sharp growth in audiences during the Covid lockdown period, unfortunately witnessing technology companies take advantage of content owners within the FAST gold rush.  Tech start-ups looking to disrupt the broadcast industry by selling dreams with cloud-based, low-effort, low-skill, fast-start services producing uninspiring linear feeds that lack structure and fail to provide a comparable television user experience (UX) for viewers and advertisers, and retaining an unsustainable high revenue share of poor earnings.

Kapang recently published its FAST2.0 standard to provide viewer confidence via a minimum channel UX specification.  FAST2.0 ensures the viewer channel experience mimics traditional channel formats filtering uninspiring simulated-live VoD-scheduled services that fail to provide a trusted broadcast experience which inevitably provides low audiences and revenues.

Some content owners have resulted to taking risk-free revenue share models or platform content deals.  These models allow channels to break even without risks and considerably less effort but has resulted in most content owners receiving less than 15% of gross revenues.  Such low revenues do not provide a financial foundation for any future content investments or growth.

The main problem with FAST is that the channel brands are not complying with the demands of the two key stakeholders, the viewers, and the advertisers.  The demands are the same for both parties, “we want FAST & CTV channels to have the same television formats…” but channels are being governed by low-cost technology services that cannot provide traditional channel functionality, success, or sustainability.    

What is a sustainable FAST Channel business model?

A typical niche FAST channel should be returning the same as any traditional broadcaster,  $1.5-$2m/annum, which can be easily achieved with an average of 20,000 people, a tiny fraction of US households, watching for 90 minutes per day. 

Larger broad audience channels should be exceeding 100,000 people per day and have an average viewing time of 3-4 hours.

If all stakeholders took a fair share and the channel complied with traditional television formats, then 10% of the US population engaging in CTV FAST services would see annual revenues exceed $10 billion providing a sustainable business model for more than 500 fully sustainable FAST CTV channels. 

The reason these audience figures are not being demonstrated now is directly related to the structure of the channels not being in the format of most television viewers.

All workflow participants must understand that content & curation is the most expensive part of the end-to-end process and must earn at least half of gross revenues.   Many major broadcasters could not afford to entertain anything less than 70% of gross earnings otherwise they could not commission and produce the content grade expected by audiences and the platforms earn more as the channels are watched more.

Platforms are commanding 50% of revenues for channel audiences as well as technology and playout fees see channels walking away with a fraction of what they require for a sustainable business.  Ironically, it is the content provided by channels, “content is still king”, that brings the audiences to platforms and now allows them to make such demands.

Channels and content owners have seen technology companies doubling their earnings, selling for high values, or raising millions of dollars in funding rounds directly resulting from content owner assets and efforts without any reward or return.  These valuations were generated by retaining audiences, turning over high revenues, and retaining a high percentage of ad revenues, all of which could not have been possible without the channels & their content.

Due to the unsustainable revenue shares FAST predominantly consists of archive content as the current structure does not provide a verifiable business case to produce fresh,  unique, and innovative content.  Ironically the industry model is dying FAST as the two key stakeholders, viewers, and advertisers, do not see the services getting better and certainly not to a level that will replace their commitments to satellite and cable services.

What should FAST & Connected TV consist of?

FAST & Connected TV already embraces the efficiencies and flexibility within IP delivery to provide television to multiple devices everywhere allowing higher yielding targeted advertising,  but the channel origin formats that viewers and advertisers love were not broken and did not need fixing.

Kapang has proven traditional formats are best by placing traditional broadcast channels next to VoD playlist channels in an EPG line up with the latter receiving less than 10% of the overall audience figures and less than 6% of the revenues due to premium advertisers avoiding the inferior services.

FAST is approaching a stale-mate situation.   All CTV platforms have stakeholder demands for broadcast-grade channels and this revolves around the quality content, television playout, and schedule curation, but channels cannot afford to recreate or reinvest in their services due to their losses to date, the higher compliant service fixed costs with no guarantees of returning any additional revenues.

Kapang can aid the success of FAST & CTV Channels

Kapang has spent a lot of time business modeling channels as it started out as a content and channel owner 7 years ago.   Kapang’s success is dedicated to aligning viewers, advertisers, and channels/content owners by providing a balanced business model and an entertaining service which is accepted by viewers and advertisers as a credible replacement to their traditional TV platforms. 

Kapang has announced that it is raising $50m backed by several large broadcast businesses to provide the FAST2.0 compliant platform providing a sustainable and investable business model for channels and content owners and providing a great experience for viewers and advertisers.   

Kapang is looking to invest in new content creation and channel yield using its centralized fund as well as growing its in-house advertising agency and channel sponsorship team.

Kapang releases its distribution & playout services

Kapang has announced the public release of its delivery & distribution solution BroadcastCDN & its in-house cloud playout service Cloudie TV their mentored FAST2.0 playout solution, both services offer channels an opportunity to use the secret sauce of Kapang across all platforms with an affordable & predictable cost.  

BroadcastCDN consists of video encoding, CDN, SSAI, ad server, monitoring, and distribution for a fixed CDN fee enabling any existing linear channels to reduce the number of integrated suppliers to one.  Broadcast CDN accepts SRT, RIST, or MPEGTS for the source feed from most on-premise or cloud playout providers.

Broadcast CDN is halving channel costs by eliminating the requirements for ZIXI distribution, cloud SSAI services, and expensive CDN suppliers, reducing business risk, increasing ad revenues, and distributing every channel to an unlimited number of global platforms without any additional distribution fees  

Cloudie Playout integrates with Broadcast CDN to offer start-up channels and FAST2.0 transformation from underperforming VoD scheduling playout services that fail to resemble traditional TV with an integrated self-service mentored playout & distribution service which can be broadcast within a few days. 

Cloudie playout provides fast broadcast scheduling requiring 1 day per week for broadcast-grade scheduling, unique channel sponsorship tools, automated SCTE insertions, and Cloudie Playout costs from $1,170/month with the Kapang subsidized solution.

BroadcastCDN & Cloudie Playout clients receive 80% of revenues generated on Kapang (UK & USA) and have fully integrated delivery costs from $0.05/hour watched with a $0.25-$0.50/hour earning potential with no fixed fees to distribute the channel to other global platforms.