Not long ago, streaming TV had a promise: Subscribe and ads would be a thing of the past.
One way Netflix achieved streaming dominance was by luring customers to an ad-free experience. Amazon Prime Video, Disney+ and HBO Max followed suit.
Well, that didn’t last long.
With streaming services, it is becoming increasingly difficult to avoid advertising. Gradually, Netflix, Disney+, Peacock, Paramount+ and Max have added 30- and 60-second commercials for a slightly lower subscription price. Amazon has advertising enabled by default. And live sports on these services include built-in commercial breaks no matter what price you pay.
The importance of advertising was highlighted this month when Amazon and Netflix held their first in-person presentations during the so-called Upfronts, a decades-old television event in New York where media companies try to woo advertisers.
Netflix sent Shonda Rhimes, the successful executive producer of “Bridgerton” and creator of “Grey’s Anatomy,” to pitch the service to marketers. Amazon was packed with celebrities like Reese Witherspoon and Jake Gyllenhaal, as well as a live performance by Alicia Keys.
“Remember when streamers told you, ‘We’re going to do TV in a new way, so I’m afraid we won’t need your little commercials anymore,'” “Late Night” host Seth Meyers said Advertisers One of the events this month. “A few years later, every episode of ‘Shogun’ is replaced by ‘Whopper, Whopper, Double Whopper!’ interrupted.”
Or as one frustrated consumer vented on social media last week: “Why am I paying for Prime Video and getting all these commercials?” It’s starting to get annoying.”
Representatives for Netflix and Amazon declined to comment.
Perhaps the change in viewing experience was inevitable. As media companies struggled to launch streaming services to compete with Netflix over the last decade, they valued subscriber numbers above all else.
There was only one problem: profits.
Companies wasted money and Wall Street collapsed in business. So leaders turn back the clock. They order lower-cost, tried-and-true series like medical dramas, legal shows and sitcoms. They offer bundled packages to reduce consumers’ temptation to click the “cancel” button. (Disney+, Hulu and Max, for example, will collaborate later this year.) And they’re relying on advertising to drive sales.
“The crazy thing is we might end up on ‘Texaco Presents’ again,” said Chuck Lorre, the comedy hitmaker behind shows like “Young Sheldon,” “Two and a Half Men” and “The Big Bang Theory.” .” “I’m old enough to remember that Fred and Barney smoked cigarettes in The Flintstones because the show was paid for by a tobacco company.”
Consumers can still avoid most ads for a price. Most streaming services still have an ad-free version, including Amazon, which requires subscribers to pay an additional $3 per month to skip the ads. Apple TV+ still only offers an ad-free experience.
However, the commercial levels are becoming increasingly important to their business. There were at least 93 million ad-supported streaming subscriptions in the United States at the end of last year, according to estimates from Brian Wieser, an industry analyst, and Antenna, a subscription research firm. As Amazon’s automatic shift to advertising and other streaming services have gained more ad-tier customers, Mr. Wieser and Antenna estimate that there are now at least 170 million ad-supported subscriptions.
According to Antenna, in the first three months of 2024, 56 percent of new subscribers to a streaming service chose the cheaper ad tier. That’s an increase from 39 percent last year, the company said.
Executives have tried to reassure subscribers that while advertising has returned, it won’t be as overwhelming as on traditional television.
Just a few years ago, an episode of a prestige cable TV drama like Ryan Murphy’s “American Crime Story” would be interrupted by 21 minutes of commercials. But advertising takes much less time on streaming services. For example, on Disney+, the average viewing time for commercials is four minutes per hour. On Hulu it’s just over six minutes.
“There’s always been this idea that people don’t like advertising,” said Rita Ferro, head of advertising sales at Disney. “I don’t think that’s true. People don’t like bad advertising or a bad advertising experience.”
In the data-rich streaming world, she argued, the advertising experience is more informed than on traditional television, and the company knows what a person’s viewing preferences are and “what products are relevant to you,” she said.
Mr. Wieser, the analyst and founder of consulting firm Madison and Wall, said he expects media companies’ overall advertising revenue to continue to decline, even if ads appear on streaming services. He predicts that time spent watching advertising on television – both streaming and traditional network and cable television – will decrease by 24 percent by 2027 compared to the previous year.
One of the reasons, he said, is that many people will continue to pay extra to avoid ads on services like Netflix. “The vast majority of Netflix subscribers will never choose an ad-supported option, no matter the price,” he said.
Still, in some cases, viewers may not have a choice. Even Netflix subscribers who pay more than $15 a month for the ad-free tier will face commercials when they tune in to the streamer’s two NFL holiday games this year or WWE shows next year. The same goes for subscribers to Peacock, Paramount+ and Prime Video, which also broadcast live sports.
“Amazon sells the NFL. “How is this different from what Fox or CBS is selling?” said Joe Marchese, a former head of ad sales for the Fox Networks group who is now a venture capitalist. “Netflix is presenting a Shonda Rhimes show. What you present to advertisers is creating a culture. Would you like to be there? That sounds exactly the same. The only difference is who does it.”
And in some cases, the half-century precedent is shocking.
For decades, HBO didn’t offer any commercials. But now advertisers can run commercials at Max’s ad tier during episodes of older HBO series and an ad before a new HBO series. At the company’s advance presentation to advertisers, executives played a clip from a GMC Sierra pickup commercial that ran at Max’s ad tier before episodes of HBO’s “True Detective.”
It was particularly impressive to see Casey Bloys, HBO’s chairman and a two-decade veteran of the network, more familiar with developing scripts than pitching to marketers and promoting programs “that reach multiple audiences.” “. While reciting statistics about the audience composition of the HBO documentary series “Hard Knocks,” Mr. Bloys stumbled over his words, chuckled and said, “I’m new to commercial banter.”
At Disney’s preview event, ABC late-night host Jimmy Kimmel poked fun at media companies suddenly going back to their roots, including by bundling different streaming services into one package. Viewers “can turn on their TV and get all the channels in one package for one price, all with advertising support,” he said. “We call it simple cable, and it will blow your mind.”
And then Mr. Kimmel took aim at Netflix, reminding marketers that they “spent years ignoring you and making fun of you.”
“Remember when Netflix thought they were above everything?” he said. “They came in and destroyed commercial television. And now guess what they want to sell you. commercials. On TV.”
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2024-05-26 09:03:02
www.nytimes.com
