As the landscape of media consumption exponentially evolves, the rush to acquire and retain viewers has led to the rapid growth of FAST(Free Ad-Supported Streaming Television) and AVOD (Advertising-Based Video On Demand) platforms. According to Statista, the number of AVOD/FAST users is expected to hit 3.4 billion users by 2027. However, as these platforms forge partnerships with content providers to keep up with demand, they encounter a series of challenges that revolve around financial transactions and managing partner payments efficiently – both crucial for success. Let’s take a closer look at the challenges Content Providers, who are generally paid by revshare (along with other financial terms – MGs, Recoupable Fees, Fixed Fees, Inventory share), face when it comes to payments.
1. Rapid Finance Infrastructure Development Leading to Unreliable Manual Effort
The fast-paced nature of the media industry has forced FAST/AVOD platforms to hastily establish their finance infrastructures. Often, this process involves numerous spreadsheets and manual steps that are prone to errors and time consuming. While this approach might be acceptable during the early stages of business, as the platform matures, it becomes crucial to streamline and automate payment processes. Doing so not only reduces the risk of inaccuracies, but also improves operational efficiency.
2. Auditability & Traceability
Maintaining auditability and traceability is imperative for maintaining control over financial transactions. As platforms expand their partnerships and revenue-sharing agreements, audits become an inevitable aspect of the business. Ensuring that these audits can be handled with ease requires a comprehensive system that accurately records all financial interactions between the platform and its content providers. This not only safeguards against discrepancies, but also fosters trust in the financial relationships.
3. Challenges in Reporting
The intricacies of reporting within the FAST/AVOD landscape are manifold. These challenges include:
- Volume of Data from Ad Delivery: The sheer volume of data generated from ad delivery can be overwhelming. Collating, organizing, and making sense of this data can be a time-consuming task.
- Adjustments for Different Supply and Demand Partners: FAST/AVOD platforms often collaborate with various supply and demand partners, each with unique terms and conditions. Ensuring accurate adjustments for these differences demands a meticulous approach.
- Accounting for Contract Terms and Recoupable Expenses: Content providers are compensated through various financial terms, including Minimum Guarantees (MGs), Recoupable Fees, Fixed Fees, and Inventory Share. Managing these variables requires precise tracking and calculation.
- Generating Content Provider Statements: Generating accurate and comprehensive content provider statements on a regular basis is crucial for transparency and accountability.
- Determining Advertiser Revenue and Billing: Monthly tasks involve determining the revenue generated from advertisers, billing accordingly, and then generating and posting the necessary Journal Entries (JEs) for accurate financial reporting.
FAST/AVOD platforms are undoubtedly transforming the way content is delivered and consumed. However, alongside this innovation comes the complexity of managing financial relationships with content providers. The challenges mentioned—rapid finance infrastructure development, auditability and traceability concerns, and reporting intricacies—highlight the need for a well-structured, single automated payment system. One that can ingest data at scale, manage complex adjustment logic, has controlled and auditable process for reviewing and approving partner shares and automation in a traceable and auditable fashion to efficiently handle the nuances of content provider compensation. By addressing these pain points, FAST/AVOD platforms can pave the way for smoother, more transparent, and mutually beneficial partnerships with content providers.
If you need help with your FAST/AVOD financial operations and partner payments, content planning and licensing, visit https://whipmedia.com/fast-solutions/