TV Industry Starts Running Fewer Ads To Combat Netflix, Cord Cutting

from the evolving-dinosaurs dept

Historically, the cable and broadcast industry has responded to Internet video competition in the only way a mammoth legacy industry knows how: denial, dirty tricks, price hikes, more dirty tricks, and more denial. And instead of giving customers what they want (lower prices, ad skipping technology, more flexibility in programming packages) they’ve arguably often made things worse — like stuffing more ads into every viewing hour.

Nielsen data suggests that ad time per hour on has gone up from 14:27 to 15:38 minutes per hour on cable, and 13:25 to 14:15 minutes per hour on broadcast — since 2009. When all the ads wouldn’t fit, they’d just edit or speed up the programs, or utilize more product placement. All while raising rates on consumers at four times the pace of inflation. But there’s a small indication that the cable and broadcast industry may have finally started realizing they can no longer get away with this in the Netflix age.

With ratings in free fall and cord cutting (and “cord never“) numbers giving some executives indigestion, Discovery and Fox recently acknowledged they’ve been running fewer ads during their prime time programming. Time Warner last week also declared it had seen the light, acknowledging it was going to lessen the ad load specifically on its networks aimed at Millennials:

“We know one of the benefits of an ecosystem like Netflix is its lack of advertising,? Howard Shimmel, chief research officer at Time Warner?s Turner Broadcasting, said in an interview. ?Consumers are being trained there are places they can go to avoid ads.”

Even Viacom, which had been leading the charge to stuff more ads in each hour, appears to have suddenly realized that something has to change:

“Viacom CEO Philippe Dauman talked about cutting ad loads during an investor conference in September. Viacom has been working on non-Nielsen metrics to sell advertising as more of its younger viewers watch on non-traditional platforms…”With those kicking in we?ll be in position?we?ve been talking to a lot of advertisers about it, which they like?to reduce ad load in primetime across our networks, which will improve the consumer experience and drive pricing,” Dauman said.

Granted we’re not out of the deep, dark denial woods quite yet. These companies may be cutting ad load but they’re just charging more for the same ads, hoping they can rebalance the books and ignore the Internet video revolution waiting in the wings. Many other execs still see cord cutting as a bit of a fad, one that will reverse itself once Millennials procreate. The reality is that you’ll know the cable and broadcast industry is finally taking Internet video seriously when they do the one thing most of the industry’s execs are utterly terrified of: competing on price.

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Companies: discovery, netflix, news corp, viacom

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Comments on “TV Industry Starts Running Fewer Ads To Combat Netflix, Cord Cutting”

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That One Guy (profile) says:

Too little too late?

While it’s nice that they seem to be considering doing something about the reason they’ve been bleeding customers, or not gaining them in the first place, I can’t help but wonder just how effective it’s going to be.

How many people, used to on-demand offerings where you watch what you want, when you want it, can pause, fast forward and rewind without trouble, are going to care about a service that allows none of that?

How many people, used to paying for a service without ads, are going to be tempted to switch or even use a service that involves payment and ads?

They had a chance to adapt years back, and instead they went with denial, price hikes, and more denial. At this point they’re going to have to scramble like mad just to keep their decline from speeding up even more, and it’s possible that no amount of desperation will be enough to keep them afloat in the face of the competition, to which I can only think, ‘Good riddance’.

Violynne (profile) says:

Consumers are being trained there are places they can go to avoid ads.
This statement comes from an industry which knows not the definition of irony, as when cable was introduced many years ago, one of the benefits was commercial-free programming.

Nickleodeon, MTV, TBS, and even AMC (yes, that AMC) all were commercial free in the early days of “cable”.

Then someone woke up one day and said, “We can push ads like never before and customers won’t have a choice!”

Then came the on-screen pop-ups. “Hey, watch our next show starting in 12 minutes!” followed by another “Watch this show on Thursdays!”. Yep, this is called “value to consumers” by this industry.

The industry wasn’t done. Not only did they get away of bilking people of their money by pushing ads and taking a monthly fee, throwing in pop-ups during the show, many cable providers push ads in their own cable guide, as to drive home that we, the consumer, are the product.

Cable can turn itself around, but not with the idiots running it today.

PaulT (profile) says:

Re: Re: Re: Re:

I’m not sure how they’re configured so I’m just guessing here, but…

Wouldn’t the CC need some sort of instruction as to where on the screen to appear? If so, could moving the screen also move this position to a degree where they’re no longer visible or the software is being given impossible parameters to display them (for example, an area is defined with a certain font size and it becomes impossible to display them at that size in the newly resized space)?

If so, that could cause the text to no longer be visible even if they’re not literally obscured by the popup.

Dr Duck (profile) says:

Re: Re: Re:2 closed captions

>> If so, that could cause the text to no longer be visible even if they’re not literally obscured by the popup.

No, there’s no way a pop-up can affect the position or visibility of the closed captions. Open captions (like in-program subtitles) of course can be obscured like any other program material.

I know what the OP is saying, but at worst a pop-up is a distraction from the captions. It cannot cover them up.

Not an Electronic Rodent (profile) says:

Re: Re: Re: Re:

Closed captions are generated and overlaid locally — in the TV, STB, DVR etc. There’s no way they can be obscured by an in-program popup.

Maybe not… but they can, and do, obscure burnt-in subtitles for anything with foreign language in. Not to mention whatever visual information may be in that (often large) portion of the screen, removing value from content you’ve already paid a &^$&$ fortune in subscription fees to watch.

Mason Wheeler (profile) says:

Re: Re:

Yeah, I kind of wonder how long this will last. The whole point of cable used to be that unlike broadcast TV, which sent its signal out for free to its viewers and was supported by ads, cable was supported by the viewers and didn’t need to degrade the audience’s experience with commercial breaks.

That lasted a while, but now… yeah. And so now people are turning to services like Netflix, because they’re supported by the viewers and don’t need to degrade the audience’s experience with commercial breaks…

EdWalker (profile) says:

Re: Re:

MTV and TBS were never commercial-free. MTV perhaps had a lack of commercials when it first came on the air until it could prove its audience, but I don’t believe they were intentionally commercial-free.

TBS has always run commercials, even dating back to the days when it was known at WTCG, Superstation 17. Most notably were the number of per-inquiry product purchase commercials run on the station, where orders would all go to the same P.O. box in Atlanta.

That said, these days TBS is speeding up the play of programs like Seinfeld to increase the number of commercials they can play, which is just obscene to think about.

Anonymous Coward says:

Re: Re: Re:

…TBS has always run commercials, even dating back to the days when it was known at WTCG, Superstation 17…

You must be older than I am 🙂

I remember when my parents first got cable and “WTBS” was one of the basic stations. I do remember the superstation moniker, too. I also remember local newscasts from Atlanta. But after a few years the programming must have been split into the local broadcast and the cable broadcast: the network became “TBS” and no more Atlanta newscasts.

Though I do admit it’s been a few years since I’ve watched that channel, and only when it had NBA playoff games.

Patrick James says:

Can't beat Netflix so easily

The cable industry is not doing enough. It’s a matter of too little too late. Netflix is already light years ahead in quality of content and quality of content delivery with zero ads. The end of cable industry has come even nearer with the rising trend of “region jumping” using VPN services like PureVPN.

I frequently use PureVPN to jump Netflix regions because movies and TV shows unavailable on one Netflix region is always available on some other region. Why would I need cable or even another streaming service? Netflix and PureVPN are more than enough for my entertainment needs!

PaulT (profile) says:

Re: Re: Re: Re:

To be fair, his comment made sense in context anyway. The author had “blinkers” because he mentioned one and not another of the major advantages of streaming services? One that’s irrelevant to the context of the article. Really?

In fact, I’d almost argue the the advertising thing is what’s going to be driving further people to streaming with Hulu having recently added an option to pay extra to get rid of them. I know at least one person who swore never to use Hulu again who resubscribed because they introduced this feature (though to be fair his problem was technical issues with the ad streaming, no opposition to their existence). I wonder how many more people have been considering a switch now that the majority of shows won’t have ads if you pay $5/month more.

ltlw0lf (profile) says:

Re: Re: Re:2 Re:

I know at least one person who swore never to use Hulu again who resubscribed because they introduced this feature (though to be fair his problem was technical issues with the ad streaming, no opposition to their existence). I wonder how many more people have been considering a switch now that the majority of shows won’t have ads if you pay $5/month more.

I had technical issues with them that caused me to drop supporting them too…even though I appreciated the fact that I was paying to watch advertisements on my set top box when folks who were going to Hulu via a web-browser on a computer were seeing the same advertisements for free.

My issue was that they wouldn’t support any device older than a year old. My two year old LG Blu-Ray player stopped working with Hulu, and their technical support spent six months using me as a guinea pig (while I paid for the privilege) to figure out why their system wasn’t working.

When my year old set-top box started to see the same issues, I could no longer use their service, and told them to stop charging me. Haven’t been back (except maybe once or twice via a computer.) Won’t come back until they can show that they fixed their technical support issues. In their defense, they did offer me a couple refunds for months in which I could not use their service because of technical issues, but the number of refunds was less than the amount of money I spent with no service.

PaulT (profile) says:

Re: Re: Re:3 Re:

The guy I know kept getting a message telling him to turn off ad blockers. The thing is, he was on a device that he couldn’t possibly install such a thing on (I forget which), so it was basically accusing him of bypassing ads he couldn’t bypass. It’s great that Hulu now allow you to remove them, but I found it ironically amusing that the ads they were using to partially fund them had introduced a technical issue that was losing them paying customers.

“My two year old LG Blu-Ray player stopped working with Hulu, and their technical support spent six months using me as a guinea pig (while I paid for the privilege) to figure out why their system wasn’t working.”

My guess would be a firmware update that’s installed automatically on the player and introduced compatibility problems. Not sure if that was considered, but Hulu’s support wouldn’t have had that information unless they thought to Google it.

I’ve never had to contact Hulu support (I’m not in the US so they wouldn’t support me anyway!), but for what it’s worth I’ve never had any issues using it on an Amazon Fire TV.

Daniel (profile) says:

It doesn't matter

Cable is doomed.

1) Ads – People still aren’t going to want to pay for ads. Youtube, Netflix, Hulu, etc.. I think Hulu has the right idea by offering a limited commercials plan and a no commercials plan. Gives the consumer choice for a few dollars more.

2) Cost – It’s way to expensive when most people watch very few channels. Build your own package with reasonable prices and a choice for no ads for a small fee would definitely help. They’d probably actually make *more* money due to it being more financially available to people.

3) The medium – Cable is one way and there’s no ability to pause or rewind, limited on-demand, etc.. It only makes sense for cable to be broadcast over TCP/IP (internet) instead of it’s existing infrastructure. Cable providers are still struggling to output 1080p (most are 1080i or 720p), where Netflix is already pushing out 4K for select shows. Limited integration with a Smart TV… the list goes on. IP TV also benefits from future compression advancements much more quickly than existing technology.

4) Interactivity – Cable isn’t interactive at all, which makes no sense. You would think these companies would be more interested in the opportunity for statistics, polls, ability to purchase content, suggestions, etc. that could be available. No reason that I can’t hit a button on my remote and have the Blueray for a series or movie delivered to my door or transferred to my NAS.

Daniel (profile) says:

Re: It doesn't matter

Oops… One more.

5) Cable Box – Most useless equipment in the house. Between Smart TV’s, game consoles, internet connected media players, media boxes (Apple TV, etc.), what is the point of have a bulky cable box that costs $200+ or $5/mo+ (and you usually still don’t “own” it). Smart TV’s are starting to come with quad core processors, if it can stream Netflix in 4K it can stream a cable broadcast.

hij (profile) says:

Do These People Ever Go Home?

One day some of these people are going to retire and spend a little time with their grandchildren. When that happens they are going to be shocked to watch the kids playing with tablets and playing around with apps, interactive websites, and videos on the web. I only wish I could be there when they dirty their diapers as they realize the advantages of spending more time with actual human beings when they were younger and in charge of a large corporation. Whatever ghouls are feeding them the information that the execs want to hear will be laughing as they go to their bank’s website and count the money instead of watching their televisions.

ahow628 (profile) says:

Netflix originals

A few years back, I placed Netflix firmly in the niche category. When they announced they had inked a deal with Kevin Spacey for House of Cards, I was very skeptical, but it definitely piqued my interest. After watching the first season of House of Cards in two days, I was like, “This is the future.” Now, I see Master of None, w/ Bob and David, Narcos, and all the other originals and I kind of panic because I will never have time to watch everything I want to watch. Netflix has changed my life.

This leads to my second point, which is that it hasn’t changed my kids’ lives AT ALL. They started out watching Dinosaur Train, Elmo, and now Puffin Rock (an original) on Netflix. When we are in a hotel room and they see a commercial Nick Jr or whatever, they are like, “What the F is this garbage? Put my show back on!” They just have no clue and neither does cable.

Gourdman (profile) says:

Re: Netflix originals

It’s not just the quality of Netflix and Amazon original programming that poses a threat. Cable also does a poor job of handling niche markets. Where, on cable, do you turn if you’re a cinephile interested in the world’s great films? But you can find over 900 Criterion titles on Hulu, all uncut and commercial free.

Where do you go for international news without paying extra, or for different, noncorporate points of view?

Even before I left my cable provider in the ditch, I was spending the bulk of my TV time streaming. It was like a relationship that had run its course. Emotionally I was invested elsewhere.

DannyB (profile) says:

It's not just the ads, it's the BUGs

Another reason I just quit entirely watching cable, was the Bugs.

After a long, looooong, Loooooooooooooooooong commercial break . . .

the show starts up, and what happens? A bunch of more ads at the bottom of the screen appear with people walking around trying to sell you on watching more commercials that are punctuated by content programming, in another time slot on the same channel.

And plenty of times, these annoying program-covering ads cover actual important content from the program you are watching. Bits of text on a ransom note that is intended for the audience to read, for example.

I got so sick of this. My TiVo can’t fix it. I’ll just quit watching.

But now my TiVo is putting its own advertising in my face, so I’m on the very verge of getting rid of it for a different device. This crap, on a device I paid $400 for and continue to pay monthly for. Disgusting. Absolutely sickening. Vermin. Parasites. But even worse, I’ll call them . . . advertisers!

John Fenderson (profile) says:

Re: It's not just the ads, it's the BUGs


It was those bugs and overlays that got me to stop watching broadcast and cable completely. Every so often I’ll catch a TV broadcast at a friend’s house or something, but those damned things have gotten worse, bigger, and more intrusive. I simply can’t enjoy a show when that crap is going on. It’s far worse than interstitial ads.

DannyB (profile) says:

Re: Re: It's not just the ads, it's the BUGs

Interstitial ads? (. . . runs to Google . . .)


(of minute animals) living in the spaces between individual sand grains in the soil or aquatic sediments.
“the interstitial fauna of marine sands”

Yuk! So Interstitial ads are like some sort of scum in the sand?

JoeCool (profile) says:

Re: And they are still ignoring facts.

I’ve still got The Dish even though I only watch a couple channels a few times a week. I’d get rid of it, but my only choice for net service is 1.5Mbps DSL, and I had to fight like hell just to get that (no competition). They have a 5Mbps service, but it ends right across the street from me, and it’s been three years since they said I’d be able to get it in six months.

DannyB (profile) says:

Re: And they are still ignoring facts.

You know what?

EVEN IF it really were just a millennials issue (and it is not), that should be cause for concern when we are near the start of 2016.

The number of ‘millennials’ is only growing. The number of non-millennials is only shrinking. It is somewhat unlikely that they can cause a rise in the number of people born pre-2000. (Unless David Cohen, Comcast’s magician, can convince congress to make this happen — but nope, he’s not a lobbyist, no, nosiree.)

Anonymous Coward says:

Why should cable channels have any ads?

Why should cable channels have any ads?

Seriously, ads on cable is just greedy double dipping by the cable TV channels.

You already paid for the cable subscription, and cable TV channels all get their cut of your subscription money even if you never watch their cable TV channel.

For over the air TV it’s a different story, those channels are free and need to be paid for somehow. Cable TV however has already been paid for.

Anonymous Coward says:

Don’t really care anymore. No longer own a tv, don’t want one. Cut the cord long ago. My lifestyle has completely changed in the sense of tv watching. I won’t be going to commercial broadcast in any sense.

I can’t tell you how much money over the years I’ve saved. I can’t tell you what it is like not to have commercials shoved in your face day and night. As much as anything, after realizing what peace there is without the idiot box, I’ve done everything I can to remove them from my life. Been pretty successful at it to. If I go to someone’s house that has tv, I find I am highly irritated by them. Jarring, eye sores, with sound that screams at you for attention.

Thank you but no thank you. I’ve found something better to do with my life.

John85851 (profile) says:

What about the shows?

Okay, so now the TV channels will show less commercials and increase the amount of content? How, exactly, are they going to do this when they’re the ones who have been pushing the content creators to make shorter shows, simply so they can run more ads?

So a production company which is used to making 43 minute programs now has to make a 44 or 45 minute show? How does this change the script or the editting or the story flow?

And before you say “1 more minute doesn’t matter”, tell that to channels like TBS who take that extra minute to run commercials.

Or instead of adding an extra minute of programming, how about shows bring back the 1-2 minute title/ opening credits? It seems like shows stopped running titles/ opening credits around the time the networks wanted more time for ads.

Anonymous Coward says:

Re: What about the shows?

And before you say “1 more minute doesn’t matter”, tell that to channels like TBS who take that extra minute to run commercials.

One minute definitely matters to the showrunner, writers, actors, etc. who are making the show. If it’s heavy on dialog, you’re talking about two extra pages of script at least. If it’s an airtime minute with more action than dialog, you might be looking at an entire extra day of shooting.

A lot of stuff happens very quickly in TV shows. I watch things on Netflix through my Xbox which only allows me to rewind in 10 second chunks, and I’m still amazed that rewinding just thirty seconds sometimes takes me back two entire scenes.

GEMont (profile) says:

Darwin srikes again.

The problem with corporate structure is that if its profits start high, it has to maintain that level of profits plus an increase every year, just to fulfill its mandate as a corporation.

Since the Cable Corps started off with government subsidies and all sorts of legal privileges nobody else had, they started their life with high profits and grew steadily through the use of business methods unavailable to normal businesses.

Because of the basic mandate of all corporations that every year’s profits must be larger than the year before, it is now impossible for the Cable Industry to go non-commercial without first discovering something that will maintain its current annual profit growth rate.

The only thing they can think of doing now is lower slightly the number of ads, charge more for each ad and raise the rates for customers, but to go non-commercial, they would have to raise their rates well beyond what anyone would be willing to pay for the crap they offer, in order to replace the ad revenue that is their life blood.

Think dinosaur. Think extinct.

Because they have but one goal – greater and greater profits – and because their “brains” are geared specifically towards that goal alone, they will die before their tiny brains know they have fallen.

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