As video viewing trait of consumers gravitates to on-demand streaming platforms or services, cable and internet companies will obviously get astute about how to keep generating ad revenue that would have otherwise come from traditional commercials.
Reports say that Hulu and AT&T® are apparently considering a type of advertisement that would run when customers pause a video content, such as a TV show on AT&T’s DIRECTV® or a movie on Hulu.
“As binge-viewing happens more and more, it’s natural they are going to want to pause,” said the VP and Head of Advertising at Hulu, Jeremy Helfand, while speaking about cord cutters. As per Helfand, they will roll out “pause ad” sometime next year and the company hopes that it will give “a natural break in the storytelling experience.”
AT&T® also intends to introduce a similar type of advertisement in 2019 when an audience pauses a video. Matt Van Houten, the VP at AT&T’s advertising and analytics unit named Xander Media, said that, “We know you’re going to capture 100 percent viewability when they pause and unpause. There’s a lot of value in that experience.”
Of course, an adversarial relationship is at play here, with solid arguments on both sides. Audiences generally do not take to commercials, and a lack of them on major streaming platforms became an early selling point for cord cutting and sparked the adoption of On-Demand, Over-the-Top-TV many years ago.
Getting rid of advertisements is considered a perk now for a certain streaming service tier, such as “No Commercials” of Hulu and YouTube Premium. Prior to the advent of streaming, viewing TV sans commercials was a key pillar of paying for a DVR service from any of the cable providers or, several years ago, recording people’s favorite shows on VHS.
Audiences expect that shifting to streaming services from cable and internet companies should translate to fewer advertisements, which makes this “pause ad” idea especially remarkable on several counts. At the same time, they have no easy way to keep producing topnotch shows and offering high-quality movies at the rate in which streaming platforms offer, without additional revenue streams.
Netflix earlier said that it planned to produce original content, and that it has begun experimenting with running advertisements during Netflix Originals shows. Other companies have also begun running them on the home interface of their streaming service, and allowing production firms and studios to pay to endorse certain programs and movies.
Companies could increase subscription prices, but subscribers might switch. So that would make it tougher to produce more video content, which in turn means that it will be less likely that new subs will sign up or previous subs will return. It is a cycle, which appears to indicate that creative ways to get viewers to watch ads is the easiest solution, despite the fact that not all viewers will appreciate it.