Samsung has been the world’s largest manufacturer of television sets for 17 years running. Last year alone, it sold 8.3 million units of its most cut ting-edge, internet-connected TVs worldwide.
But when the electronics giant first tried to expand its reach into distributing movies and TV shows that viewers could buy directly through their sets, the effort generated little more than static. The launch of the company’s TV Plus platform in 2016 was a flop, executives admit, because the platform was built to offer something that most TV set owners didn’t want to buy from Samsung.
All of that changed around 2019, when Samsung made a 180-degree shift in its focus: The TV Plus homepage hub added a handful of streaming channels that were available to users for free with a tap of the remote control. Instead of asking consumers to open their wallets to pay for video-on-demand movies, Samsung was now encouraging viewers to plant themselves in front of the screen to surf through an array of free channel options. And that, it turned out, was a much more attractive offer to the average TV owner.
“It was a pretty crowded space,” admits Michael Scott, VP and head of sales and operations for the Samsung Ads division, of the company’s initial effort into video on demand. “We realized that our ability to serve the consumer was by providing more of a breadth of content than through transactions.”
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In the extremely competitive TV content marketplace, Samsung has a unique distribution footprint compared with media and entertainment firms. Samsung’s distribution content is based on TV set sales, rather than on the number of viewers who tune in to a specific platform, or the geographical boundaries of a TV station’s signal reach. Today, the Samsung TV Plus platform encompasses more than 2,600 channels that are available free (although not in every territory) with advertising to the owners of about 630 million Samsung TV sets, smartphones and other devices sold in 24 countries.
At first, Samsung’s free channels were modest — movie channels with low-profile titles, lifestyle shows and short-form content provided by YouTube creators. Today, the lineup has more than tripled in size. In the U.S. and Mexico, Samsung TV Plus offers an array of older shows and movies from most major Hollywood conglomerates, including Warner Bros. Discovery, NBCUniversal, Paramount Global, A+E Networks and AMC Networks. There are themed channels for key genres, from movies to sitcoms to kids shows to sports and news. Conan O’Brien’s production banner recently created a channel for Samsung that features a steady stream of the punchiest highlights from his 2010-21 run on the TBS late-night series “Conan.”
Samsung’s pivot to free streaming channels proved to be well timed. Viewership of FAST (free, ad-supported streaming TV) channels skyrocketed during the pandemic.
Today, Samsung is the world’s largest distributor of FAST channels, and FAST channels are slowly but steadily growing as a source of profits for content owners. In most cases, Samsung’s deals with content owners call for them to split the advertising proceeds generated by each channel. At present, Samsung has about 400 channels available in North America, with more to come.
The FAST expansion on Samsung and other platforms has been welcome news for the traditional entertainment industry, which has been turned inside out by the rise of streaming. FAST channels are becoming a new form of syndication — a way for studios and other content owners to generate money from older titles that are already produced and on the shelf. In the streaming era, the syndication sales that previously made a lot of money for actors, writers, directors and producers slowed to a trickle as platforms like Netflix and Amazon Prime Video bought out all rights to their original content commissions for 10 years or more. Producers couldn’t pursue syndication sales because they weren’t allowed under streaming contracts. But as indicated by the proliferation of FAST channels, those rigid rules are changing. FAST channels are a moneymaking platform that the industry can’t afford to ignore.
Samsung has competition in the TV-set-based channel distribution arena from fellow manufacturing titans including Sony Corp., LG and Vizio. But industry insiders say Samsung is far ahead of the pack in terms of investment and the drive to make Samsung TV Plus a meaningful distribution partner for Hollywood.
“We really took our cue from the viewers and from the consumers,” Scott says, “of really
understanding what they want. Once we saw that there was great appetite there — that our hours of viewing went up — we leaned in and started making some significant investments in partnerships and in content as well.”
Samsung TV Plus’ ambitions as a content platform are growing. Last month, the company disclosed content licensing deals with the American Hockey League that will bring live hockey games to Samsung TV Plus’ FAST channel menu for the first time. A deal with Major League Baseball will make replays of MLB and minor league games available on Samsung TV Plus. A new Formula One channel will do the same for races from F1, F2, F3 and F1 Academy throughout the season. Also coming is a PGA-focused golf channel and the MMA-centric One Championship.
The embrace of live events and more exclusive content is a natural evolution for the service, says Takashi Nakano, senior director of content for Samsung TV Plus. He joined the company in 2016 to help harness its potential as a content distributor after the launch of the initial TV Plus platform, which offered video-on-demand rentals of recent movies for $25-$50. Transactional VOD had been “a gigantic failure,” he concedes. “Part of it was execution. Part of it was market dynamics. But what we learned was that a lot of people came in to browse and look,” although they rarely hit the “buy” button.
Eventually the Samsung team realized they needed free content to serve as flypaper for the looky-loos. From there, they saw the potential in advertising sales as viewers stuck around to watch the free channels.
“We see a long-term secular shift in television consumption,” says Nakano. “There’s great content coming onto our platform, a better user experience, being able to watch the content you want, where you want to watch it and how you want to watch it.”
FAST outlets look much like old-fashioned cable channels that offer a 24/7 lineup of content orga- nized by myriad themes, from cooking shows to true crime to Hallmark Channel movies to foreign-language films. There are entire channels devoted to long-running series such as “CSI” and “Doctor Who.” In recent years, the content mix has evolved to include news, sports, lifestyle and how-to and numerous other genres.
“I came from traditional cable, where when we were fighting to launch a channel with DirecTV or Dish or Comcast, that was a billion-dollar investment to do one channel. Today, if you own content, you can launch a channel for thousands of dollars,” says Nakano. “The dynamics are very different with what you can do with that type of structure. And add to that the scale of being able to deliver content around the world, because you’re not terrestrial-based.”
It took a little time to persuade top-tier content owners to craft channels for Samsung TV Plus. Paramount Global’s FAST channel aggregator Pluto TV sublicensed a number of its channels to help kick-start the effort. Today TV Plus’ major content partners range from Warner Bros., NBCUniversal, Disney and other studios to individual YouTube creators.
“Our deals vary across the board,” Nakano says. “I look at FAST as the opportunity to bring content to millions of people that wouldn’t otherwise be feasible outside of putting it on YouTube.”
Based outside Seoul, Samsung in its entirety generated $194 billion in revenue last year, which yielded $4.8 billion in operating profit. The company has no shortage of muscle in global financial circles. In recent years, there has been speculation about whether it wants to grow in media or entertainment; certainly, it has the deep pockets to acquire a major studio or other significant film and TV assets. The investment in channel distribution has offered the company a window into entertainment industry economics at a moment of transition that stands to benefit Samsung.
The growth of advertising sales as a revenue source for Samsung was underscored on April 30, when the company held a presentation for advertisers and media buyers in midtown Manhattan. The 90-minute event walked the Madison Avenue mavens through the company’s increasingly expansive vision for Samsung TV Plus. One such initiative will bring much more video game content to the platform. The advertiser presentation demonstrated how Samsung-made phones can easily be turned into joysticks and controllers to play games on the biggest screen in the house.
“No console required,” Cathy Oh, Samsung Ads’ VP and global head of marketing, told the crowd as she outlined the gaming push. In this sector, Samsung makes its money through ads woven into the games. “We can customize the game experience with branded backgrounds and ads in game breaks,” she said.
Samsung will not disclose the advertising revenue breakdown from its FAST channels. It’s undoubtedly still a small percentage of the company’s overall cash flow, but it’s primed for growth. And it may well turn out that the consumer insights to be harvested from an in-house TV, movie and gaming platform might be even more valuable in the long run. Samsung has made enormous investments in developing generative AI tools that have natural applications for managing an overwhelming volume of content on the platform.
For Team Samsung TV Plus, every day is a “learning experience,” Nakano says, “around how content is changing and how people are navigating it. Whether it’s sports, news, general entertainment — we can see trends and patterns in how different parts of the country watch different things and how different parts of the world watch different things.”
The volume of information — “privacy-compliant,” Nakano stresses — coming through the Samsung TV Plus pipes is overwhelming. But therein lies the opportunity.
“It’s difficult to understand how you take all this data and distill it into actionable, forward-thinking content decisions,” he says. “But that’s what makes this job so exciting.”
