February 18, 2023

Netflix with ads (the ads)

The customer base aside, Netflix CEO Reed Hastings has already proclaimed himself a fan of the company's foray into ad-supported video-on-demand (AVOD), calling the rollout of Netflix with ads

a good tactic, because we get to offer consumers lower prices. I didn't believe in the ad-supported tactic for us and I was wrong about that. I wish we had flipped a few years earlier on it. But we'll catch up and in a couple of years we won't remember when we started it."

Hasting is not alone in his enthusiasm for the AVOD model. Fox saw revenue for Tubi grow nearly 30 percent during the last fiscal quarter, with Tubi's revenue surpassing the advertising revenue generated by Fox Entertainment "in a meaningful way" and quarterly viewership rising to 1.3 billion hours.

Given the light ad load and the reasonable cost, I'm sticking with it. It's still a work in progress. The Roku app crashes occasionally when launching an ad, though it's getting better. In terms of platform stability, Tubi still has the advantage. The ad selection was terrible when it first launched but that's improved too.

During the halcyon days of the DVD era, the "Netflix Prize" made a big splash among statisticians and programmers. A one million dollar bounty and a fifty grand yearly incentive were awarded to independent teams who could better optimize its movie recommendation system.

Well, Netflix needs to resurrect that program and apply it to AVOD. Who knows, maybe it already has. I'd assume advertisers would pay premium rates to have their ads shown to consumers interested in their products. Isn't that why a big tech company like Microsoft got into this business in the first place?

So far, the ad placement doesn't seem any smarter than the century-old OTA approach, according to which broadcasters spray ads into the ether and hope to hit their prime demographic. At least when watching golf, it's clear that the advertisers expect a bunch of corporate types with deep pockets to be in the audience.

I did check the "Behavior advertising" box, and given two decades of my viewing history (counting all those DVDs), Netflix should know my tastes very well already. But for all the talk of big data and AI these days, I observe very little intelligence on display in online advertising beyond cookie tracking.

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Netflix with ads
Netflix with ads (content)
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# posted by Blogger Dan
2/21/2023 10:51 AM   
The ROKU channel is ad supported. For quite a while the ads were not disruptive to viewing, which in my case consisted of watching classic TV programming such as Rockford Files, Murder She Wrote and Magnum PI.

But ROKU has not been able to keep its inventory of classic programming - both Murder She Wrote and Magnum were removed. Worse, the commercial disruptions have been unpleasant. I think 5 total minutes of ads per 50 minute show is a limit. Above that and the viewing experience becomes unsatisfactory. Watching the ROKU channel has become unpleasant. Plus the ads are extremely repetitive, as if they only have ad buys from Proctor & Gamble.

I watch very few "shows" on commercial TV and one reason is the ad density is excessive. Excessive commercial breaks is a growing problem with sports programming but then one does not have to pay attention to follow what is going on - commercial breaks are a reason to get up and get something to eat and it is no big deal to mistime the return to the couch. But with a TV show you can't really miss minutes of the show and be informed.

If NetFlix is smart they will be loyal to a strategy of limited commercial disruption. This is a niche that needs to exist, but it seems everyone involved in programming chooses to kill the golden goose.