Ten Years Later, Cable Industry Finally Realizes More Ads Is Not The Solution To Cord Cutting

from the who-knew? dept

For years we’ve noted how the traditional cable TV industry is slowly-but-surely bleeding customers tired of paying an arm and a leg for bloated bundles of often terrible programming. And for just as long we’ve documented how far too many cable and broadcast executives are hell bent on doubling down on all of the bad behaviors that cause these defections in the first place. That has ranged from knee jerk price hikes in the face of growing streaming competition, to efforts to stuff more ads into every viewing hour, whether by editing down programs or speeding them up to ensure maximum commercial load.

The ugly truth most cable and broadcasting executives can’t face is that the era of the sacred cable TV cash cow is over. Television simply isn’t going to be as profitable in the wake of real competition and the more flexible, cheaper pay TV alternatives that competition is providing. And while countless industry executives still somehow think this is a fad they can wait out, there’s growing evidence that at least a few industry executives are finally getting the message.

Fox executives, for example, last week signaled that they intend to dramatically lower the ad load to two minutes an hour across their networks by 2020 (it’s currently 13 minutes for broadcast networks and 16 minutes for cable):

“The two minutes per hour is a real target for Fox, and also our challenge for the industry,? said Ed Davis, chief product officer for ad sales at Fox Networks Group, in an email. ?Creating a sustainable model for ad-supported storytelling will require us all to move.”

By “move,” Davis means “actually compete and adapt,” which should be a no brainer after watching ESPN lose ten million audience members in just the last few years. The old model of hammering customers with as many ads as they can stomach (and then some) while also charging massive subscription fees is finished. That’s something even Comcast NBC Universal execs seem to realize as they also aim to cut ad load during prime time shows by 10% and the number of ads during commercial breaks by 20%:

“The industry knows that television is already the most effective advertising medium there is, but we need to make the experience better for viewers,? said Linda Yaccarino, chairman of advertising and client partnerships at NBCUniversal, in the statement. ?We?re reimagining the advertising experience for consumers, marketers, and the entire industry.”

It can’t be understated how hard it was for the industry to come to the realization that perhaps it needed to annoy its paying customers less and compete a little more. Many of these same executives have spent the better part of the last decade either ignoring or downplaying the cord cutting threat, many arguing it was just a fad that would end once Millennials began procreating more (that didn’t happen). Combined with the rise of more streamlined and expensive alternatives (Dish, Sling TV, AT&T’s DirecTV Now, etc.), there’s some real signs of evolutionary traction in the stubborn sector.

That said, there’s still plenty of opportunities for these companies to double down on bad behavior on other fronts. As TV becomes less of a money maker, many companies have just started jacking up the price of broadband (via either usage caps and overage fees or obnoxious hidden fees), given there’s no competitive repercussion. And with the looming death of net neutrality, the use of anti-competitive tactics to jack up your TV/Phone/broadband bill in other “creative” ways is going to grow as these companies seek out their pound of flesh elsewhere.

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Comments on “Ten Years Later, Cable Industry Finally Realizes More Ads Is Not The Solution To Cord Cutting”

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40 Comments
Anonymous Coward says:

Re: Advertising-supportl clearly doesn't work for Spotify.

So according to out_of_the_blue Spotify and YouTube and radio can’t be supported by ad-driven models, so Masnick is stupid.

They are NOT being supported, that’s central problem that caused yesterday’s piece…

But according to out_of_the_blue Masnick is wrong when he says that the cable industry can’t be driven by even more ads, so Masnick is stupid.

Just a silly non-sequitur that you made up. — Masnick didn’t even write this, BLIND TROLL.

Anonymous Coward says:

Re: Re: Re:

You criticize Masnick regardless. That was the whole point. Masnick pointed out how advertising support, which the cable industry foisted on their existing customer base, isn’t helping them. And predictably you fell for it.

Nice going, blue boy. You couldn’t tell a sarc mark if it sodomized you.

SirWired (profile) says:

It's all about trade-offs

We are, by almost any reasonable standard, in a “Golden Age of TV”. There are daring high-quality shows that never would have received an airing in an age with less competition for viewer eyeballs. And there’s a ridiculously huge selection. (487 scripted TV shows were available on US cable/broadcast networks last year; that doesn’t even count unscripted programming.)

What’s remarkable is that all this is happening with viewer numbers that are astoundingly low compared to a couple decades ago. The top-rated scripted show in 2016 was The Walking Dead. In 1995, that would have put it between #13 (Murphy Brown) and #14 (Hope and Gloria) The top-rated broadcast show, The Big Bang Theory, would have tied for #50.

Clearly this variety isn’t sustainable with the total subscriber/viewer base on the wane. That means either more commercials to make up for the lost revenue and/or cost reductions in the production process and/or swift cancellation of shows that today would be considered to have marginal revenue.

Alternately, studios can sell shows to a streaming service to be included in their programming bundle, or they can create their own streaming service. But that’s going to either drive up the price of the current streaming services OR lead to further Balkanization of streaming content.

Christenson says:

Re: It's all about trade-offs

Or perhaps, the now-obsolete middlemen might just find themselves squeezed out of the gravy train.

Reduced revenue over peak monopoly rents needs more than “clearly this isn’t sustainable”. Driving away the audience your advertisers pay you for? THAT’s not sustainable!

Wondering how long before we start seeing a lot more “product placement” type ads, where, oh, Clark Kent brushes his teeth with Crest toothpaste, or he uses his blackberry phone.

Anonymous Coward says:

Re: It's all about trade-offs

Take a look at all the channels on cable, and tell me how many would gain significant viewership if offered for free on YouTube. That is where the fat is in the cable system. The problem is not so much the better programs, but all the other stuff that has to be supported by subscriptions to get those programs.

PaulT (profile) says:

Re: It's all about trade-offs

I get what you’re saying here, but I think you have a few fundamentals wrong. First off, your “golden age of TV” comment may be correct, but you’re talking about quality there. Ratings, as you correctly note later on, are waning. The people we’re talking about here are those who think that the “golden age” was when they got the most viewers, not when the most viewers actually enjoyed what they were watching.

“What’s remarkable is that all this is happening with viewer numbers that are astoundingly low compared to a couple decades ago”

Ah, but is it really surprising? There’s a good argument that it’s partly the lower ratings that have helped the quality here. If you only need to grab the attention of 10 million people rather than 30 million to be a success, you can take more risks and not have to dumb down the content so much. That leads to work that is less compromised, and thus potentially of higher quality than work that has to appeal to the lowest common denominator.

Similarly, it’s far more common for shows to have shorter seasons nowadays. A show that might have absolutely had to have had 24 episodes per season to fit on a schedule a few decades ago. This led inevitably to filler episodes, clip shows and talent unable to commit to a long-running show as they’d not have the room to do anything else. Shorter seasons again means that not only do you get rid of the filler, but people don’t mind jumping on to projects with shorter commitments.

The fact is, people have far more choice over the content they watch than they did 2 decades ago, as well as having far more choices outside of TV. Networks will never be able to recapture the numbers they used to have, but if they’re clever about how they allocate their resources they don’t need to either. The Walking Dead started with a 6 episode season but became an instant success, which I don’t believe would have happened if they had to stretch to 24 inevitably mediocre episodes out of the door.

“Clearly this variety isn’t sustainable with the total subscriber/viewer base on the wane.”

I disagree, but there’s many ways of looking at it. People who feel they are actually getting value for money will tend to pay more however, and obviously the days of forcing people to subscribe to bundles of channels they never watch and still pile on ads every 10 minutes are coming to an end.

“Alternately, studios can sell shows to a streaming service to be included in their programming bundle, or they can create their own streaming service.”

They already do, especially internationally. It will be interesting to find out what happens with shows like Star Trek Discovery (used to try and attract people to CBS”s own service in the US, but sold to Netflix internationally), but the networks do have choices already. They just need to work out how to maximise profits, which may or may not happening with the networks as they currently are, be replaced by streaming model or a mixture of different approaches.

Besides, that’s likely to be far better for both consumer and network than trying to find more ways to shoehorn annoying ads into schedules and forcing them to buy things they don’t want.

Ninja (profile) says:

Re: Re: It's all about trade-offs

I don’t think there are less eyeballs watching. I think the metrics are wrong. But that’s another discussion.

We have more eyeballs than ever but we also have more content being produced than ever. I do believe we are in a golden age but I also think it’s about survival of the fittest. If you can produce good content for millions and earn millions and millions then good for you but if you can’t make it good no amount of bitching and screaming will save you. This is what scares the legacy players. It’s not easy on them anymore.

PaulT (profile) says:

Re: Re: Re: It's all about trade-offs

“I don’t think there are less eyeballs watching. I think the metrics are wrong. “

I agree the metrics are wrong, but I’d say that the number of people who choose to use other entertainment sources mean that there’s still less of them.

Not that it truly matters anyway, since the number of eyeballs is only relevant if you’re depending on them for advertisers to pay you the maximum amount. Once funding is removed from depending on getting as many people watching as possible, the landscape changes.

I think what scares them is the same as the music industry – they were used to being the default entertainment for a couple of generations, and they don’t know what to do now that they’re not.

Anonymous Coward says:

Re: Re: Re: It's all about trade-offs

“I do believe we are in a golden age but I also think it’s about survival of the fittest.”

We are at the start of the golden age of video. We haven’t even gotten to the point where you can simulate everything and have it look real. But that is neither here nor there.

In the beginning 3 or 4 media companies ruled TV. Then came cable and roughly 30 channels, which grew to hundreds of channels. It still wasn’t much in the way of competition. Then YouTube, Vimeo, Netflix, Hulu, Amazon Prime, etc came into existence and the competition really began. During this time media companies were consolidating and growing so the profits kept coming in and growing. Now the consolidation has pretty much ended, and they are facing growing competition from everyone with a cellphone and Laptop. What they are beginning to see and react to is the fact that their slice of the total pie is shrinking and in 10-20 years will be insignificant.

Ryunosuke (profile) says:

Re: Re: It's all about trade-offs

it also i perspective. “Golden age of television” is dependent on who you ask. Some would say I Dream of Jeannie, or Happy Days, or MASH was the golden age. Some others would argue Knight Rider and A-Team and Airwolf and Magnum PI was the golden age. It also is dependent on what kind of programming you are talking about, TV shows? Sitcoms? Weekday Afternoon Cartoons? Saturday Morning Cartoons?

Anonymous Coward says:

Re: Re: Solved the monarch's way: TV LICENSE RUTHLESSLY ENFORCED!

This IS an interesting read for other points, but relevant part here for Americans to learn is how They threaten about the TV “license” (just one of several in image): “OUR DATABASE IS NOTIFIED WHEN A NEW TV IS PURCHASED. THERE’S NOWHERE TO HIDE.” [Upper-case in original.]

http://investmentwatchblog.com/whats-going-on-the-uk-is-now-a-no-go-zone-for-conservatives/

Appears to actually be from GOV’T: perhaps a UK serf will confirm. — Oh, there’s PaulT! Pontificating about American Cable, and the UK has THAT regime which you are subject to?

PaulT (profile) says:

Re: Re: Re: Solved the monarch's way: TV LICENSE RUTHLESSLY ENFORCED!

So, nothing to say, so you attack me instead?

Yawn…

But, I do love the fact that you’re bringing up both a government system that the UK rejected centuries ago and a TV licence that I am not subject to (since I no longer live there, which you should know by now since I’ve lived outside the UK since before I started arguing with your ignorant ass).

Even your attempts at insults come from a parallel universe. You’d have failed even if you weren’t trying desperately to distract from the facts that, once again, the predictions made by the people you hate here were correct.

PaulT (profile) says:

Re: Re: Re: Solved the monarch's way: TV LICENSE RUTHLESSLY ENFORCED!

Oh, and that link you posted. It’s obviously a blog written for idiots like you with no factual information, as per all your “news” links.

No, I’m not going to click through, but the “no go for conservatives” claim is hilarious when referring to a country that’s actually being run by the Conservative party as we speak! I’ll agree they are fucking the country up royally, but that’s because they are running it, not because they can’t go there.

Anonymous Coward says:

Re: It's all about trade-offs

There is one thing you have missed in this trade off business. What if your customer no longer cares? There will be no trade off without a customer.

Ads are one of the things that drove me away from PPV. Thing is that was 12 years ago. Today I no longer own a tv and don’t want another in my house because of the way advertising has abused the customer.

I’ve found I love the peace and quiet and not being bombarded by commercials 24/7. As far as I am concerned, I will never again allow such back. I no longer have any loyalty to any show/brand/or franchise as a result and I like that.

Dropping the ads is a dollar short and a day late. I could care less about what is on tv, a movie, or some PPV. Nor will I ever return.

rick f says:

Which means that Les Moonves and CBS will likely take the opposite approach, inserting even *more* ads into their networks and increasing the price to watch them.

On a side note, does this could well mean ‘less commercials’ but more pop-ups that take over half the screen sometimes and disrupt the flow of the underlying show.

Anonymous Coward says:

Re: Re:

Yep, more pop-ups, more paid advertising “integrated” within the show, etc. Expect even “double box” advertising where the content moves to a small piece of the screen as the rest is taken over by advertising but the show didn’t stop playing so that counts as reducing advertising, right?

MDT (profile) says:

Writing on the wall for ISP as well

Honestly, the writing is on the wall for ISPs as well. That whole charging through the nose thing and being obnoxious because you have no competition won’t last much longer either. Elon Musk wants to blanket the globe in low latency satellite internet.

Somehow, I don’t think Elon is going to play ‘happy chum’ with the rest of the industry and agree to price gouge. I think he’ll want to compete on price and service, and you can queue up the ISP incumbents now with lawsuits and lobbyist written protectionist laws to make that as hard as possible, but it won’t last.

I do get the warm and fuzzies imagining how Comcast execs will scream like gelded bulls when they have to compete at both TV AND internet.

Christenson says:

Re: Writing on the wall for ISP as well

You are one DAY late….the screaming has begun.

See this article (and others) about the FCC deciding at the last minute that a launch of a low-earth orbit internet test satellite was “unauthorized”.

https://qz.com/1226962/an-unauthorized-satellite-launch-in-india-threatens-us-regulatory-reform-in-space/

And ya, it’s a WTF — how does the FCC get authority over whether a satellite is launched or not?

Anonymous Coward says:

Unfortunately this is the main point, time

Fox executives, for example, last week signaled that they intend to dramatically lower the ad load to two minutes an hour across their networks by 2020

The linked story says they’ll lower the ad time, not the ad load… leaving an alternate possibility: "the Blipvert, a highly compressed advertisement […], which [has] the unfortunate side effect of causing some viewers to explode."

That Anonymous Coward (profile) says:

If we jam more in we can get more money!!!

or there is this other model

where a network is getting millions & millions for 30 seconds, because the time is precious during that sportsball thing.

If you offer fewer slots, doesn’t that mean you can get a better price for those slots? Not having to cut your ad to 5 seconds to be wedged in between 15 other ads promoting get rich quick schemes & wonder products for your home?

Imagine thinking of your customers are real people who really don’t want shows to be 15 minutes long with the rest being ads.

ECA (profile) says:

tHIS TOOK how long??

A Standard TV program is about 40 minutes..and 20 min of Commercials..1/3 of what you watch is Commercial..
MTV at one point hit over 40 min in 1 hour for commercials..

Then there is a problem..as MANY TV shows are based on this SAME Pattern..
10 min SHOW, 3-5 min Commercial..
Change this pattern and many shows will get Kinda OFF’..

Spend 1/3 of your life Sleeping..
Spend 1/3 of your life watching Commercials..
spend 1/3 WORKING..

Anonymous Coward says:

Re: tHIS TOOK how long??

Change this pattern and many shows will get Kinda OFF’..

Already noticeable on DVDrips—er, DVDs… several times an episode the screen fades to black, usually after a tense moment, and then the scene resumes. Anyway, the pattern’s been changing gradually over time… go watch some pre-1980s series on "DVD" and you’ll notice they’re over 25/50 minutes long. Quickly checking a bunch of my series, 6 minutes of content go missing between 1980 and 1990 (when 44 is standard).

I didn’t check the number of commercial breaks, but I feel like they’re going up; as someone else noted, "bugs" appeared throughout the 90s, later becoming ads for upcoming shows, then general ads, and by 2010 advertisers are taking giant shits on top of whatever you’re watching. Be thankful you can still see the tops of characters heads.

Rekrul says:

Meanwhile, YouTube continues to ramp up the amount of ads played during videos to the point where a 20 minute video might have 3-4 ads. This increase in ads also seems to coincide with their elimination of Flash and forcing all users to use HTML5 for videos. When Flash was still an option, I never saw a single ad. Now with HTML5, I get ads frequently. Purely coincidental, I’m sure…

Sean (profile) says:

A Little Too Late

For some cord cutters (my household) it is probably way too late. We cut the cord probably 7 years ago. I don’t really miss it. Every time we are staying somewhere that has cable TV and try to find something to watch we realize why we cut the cord in the first place. About the only way we will add pay TV to our internet is if my in-laws move in with us due to health reasons.

Anonymous Coward says:

This is why I left cable

I was watching a movie on some network, there was a commercial break, the movie came back on for 7 minutes before another commercial break. I had DVR at the time so I rewound it to see, I was just in shock. Then there’s the price; sure you can have TV service for $80 a month but you can’t watch it without this box that’s not included in the price. More than one tv, sure, HD, of course, what you want to record too, we would be happy to tack that on the price for you.

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