Pay TV Is Fighting Back Against Streaming Video With Fewer Ads
Ask any consumer why he or she loves premium streaming content delivery networks like Netflix and you’re bound to hear this response: There are no advertisements.
Commercials have long been a thorn in the side of the pay-TV industry. Yet, take commercials away and there goes a major source of revenue. Leave them as is, though, and content delivery networks have a strong advantage.
In response to this challenge, pay-TV networks have come up with a viable solution: scale back on commercials in an attempt to win over cord-cutting consumers.
“We know one of the benefits of an ecosystem like Netflix is its lack of advertising,” chief research officer at Time Warner’s Turner Broadcasting network Howard Shimmel was quoted as saying in a recent Bloomberg article. “Consumers are being trained there are places they can go to avoid ads.”
Now, several companies—namely Time Warner Inc., Viacom Inc. and 21st Century Fox Inc.—are in the process of reducing commercials. Time Warner, in fact, will be reducing its advertisement load by as much as half for prime-time content at some point in 2016. And Viacom has already begun to reduce commercials for MTV and Comedy Central. Fox is also experimenting with offering experimental and interactive advertisements instead of traditional commercials for its customers on Hulu.
Should your business follow suit and cut commercials? Keep in mind that it’s a risky move, especially for smaller operators who rely heavily on their business partnerships to stay afloat. The last thing you want to do is anger your business customers that provide your network with stable, consistent income. It’s a move that may pay off in the short term, but proceed with caution so that you don’t risk spoiling your ongoing revenue stream.
Whatever you do, don’t take the opposite approach and edit reruns to make more time for advertisements, as some companies are now doing. This is an excellent way to anger your customers and generate negative publicity around your organization. Remember that customers are paying to receive premium content, not premium advertisements. Cut away bits and pieces of your customers’ favorite shows and you’re bound to experience public backlash!