Ad-Supported Streaming Will Benefit Everyone
Source – Mandaley Entertainment
"Oh, you got a letter? I got run over! Helen gets her hair chopped off, Julie gets a body in her trunk, and you get a letter? That's balanced!" – Barry, "I Know What You Did Last Summer," Mandalay Entertainment, 1997
We learned long ago that the best way to have peace in the home is for us to make the big decisions while the wife makes the small decisions.
We keep elephants out of the backyard, decide what we'll wear to the gym every morning (she's never up at that hour) and decide how many hours a day we'll work (she says the more the merrier) and well, that's about it.
She, in turn, decides when/where we go on vacation (she does "ask"), what she's going to have for dinner (she's a carnivore, we're not) and what is on our big screen TV in the evening.
But the other evening she gave us the control and said "we" could watch the movie we wanted to see – we have totally different genre interests.
About halfway through the film, she asked aren't there weren't any commercials because she wanted to go to the bathroom and brush her teeth.
Since we had made a bad choice – good actors, dumb plot, ridiculous over–the–top action/violence – she didn't mind missing some of the "action."
For years, we watched stuff on our cable bundle which meant eighteen minutes of ads per hour, plenty of time to take care of necessities.
As she left the room, we thought of all the mediocre ads we had been missing out on.
When we first switched to streaming ... no ads.
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Too Good – Any "normal" person realized that the initial prices were a great deal and perhaps too good to be true. Along the way, studios/streamers found it difficult to cover their expenses and produce a decent profit so, they did what they had to do ... raised prices. Even though the majority are still not making a profit, they're in better shape and they can see things getting better and maybe even profitable. |
It was great ... at first. |
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Budget Bind – Individually, the higher subscription rates aren't an issue for households; but when you have 5–7 streaming services, you suddenly find the home entertainment costs are as much as your old pay TV bundle which you got rid of because it was more than you wanted to pay. At the same time, it also became more difficult to find the show/movie you wanted to watch while going from service to service. |
Suddenly, the home entertainment budget was rising and your frustration in being unable to find a film/show you wanted to watch became a royal pain. |
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Bummer – Getting the most money you possibly can from millions of consumers sounded like a great idea/business proposition. But somehow, consumers didn't understand that each services' content was more valuable than the other guy's so folks kept jumping from service to service. |
Funny, the board of directors and yes, folks on the management team thought it was a great idea. |
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Receptive Audience – While almost everyone says they hate ads, the truth is they are receptive when the ads are short, less frequent, interesting and––they mean you pay less for your home entertainment. |
You know, ads that were relevant, interesting and short. |
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No But – Even self–described ad haters don't mind "a few ads" when they are also able to pay less for their entertainment. |
Even folks who say they can't tolerate – hate – ads admit that it's really the content that matters and that they will tolerate ads that are thoughtful of the viewer. |
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Costly Cycle – Streaming services have quickly found it costs more to replace a subscriber than to offer them a lower–priced viewing option so they don't have to focus on signing up replacements. In other words, churn costs money. |
Replacing a subscriber costs more than keeping an existing subscriber and services don't grow when there's a revolving door of customers (households) in and out. |
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Unwanted Expense – Sharing streaming service passwords may seem like a nice thing to do for friends and neighbors but it also adds up to significant lost revenues for the services. Netflix led the move to clamp down on password sharing and you can be certain the others will follow. |
The other big "overhead" cost is piracy.
According to the dentsu Global Ad Spend Forecasts, worldwide ad spending – excluding boring political stuff – will reach $728B, which sounds great to every streamer and Wall Street executive but |
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Targeted Advertising – Marketers are slowly learning that streaming home entertainment provides them with a chance to tailor their messages and expenses to focus on people who are interested in their products/services rather than the entire audience. The result is a better return on investment. |
Only about $91B will be spent with US video content services – linear/streaming – and the rest will be invested in social media, websites, podcasts, OOH (out of home) and print (yes, some of us do read newspapers, magazines). |
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Better for All – By knowing more about the streaming audience and their individual needs and interests, advertisers are able to develop/deliver ads that are more educational, informative and more results–oriented, making everyone happy, especially the streaming viewer. |
Sharing that data with marketers and ad agencies helps them "prove" the value of their subscribers.
And they'll be able to more precisely measure their results ... good and bad. |
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When AVOD and FAST services can deliver ads that are effective for the marketer and home viewer, we might see our "no ads, no way" friends dive in. |
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The shift will prove Helen wrong about content consumers when she said, "I don't think we were that powerful Julie, you're giving us way too much credit." |
Andy Marken – andy@markencom.com – is an author of more than 800 articles on management, marketing, communications, industry trends in media & entertainment, consumer electronics, software, and applications. An internationally recognized marketing/communications consultant with a broad range of technical and industry expertise especially in storage, storage management and film/video production fields; he has an extended range of relationships with business, industry trade press, online media, and industry analysts/consultants. |