Marketing 3 min read

The Inevitable Arrival of Commercials on Streaming Services is Here

Soon enough, major streaming services will begin adding commercials to your subscription plans. | Image By metamorworks | Shutterstock

Soon enough, major streaming services will begin adding commercials to your subscription plans. | Image By metamorworks | Shutterstock

Sometime in 2019, both Hulu and AT&T may begin running commercial breaks when you pause videos.

Black Mirror’s episode named “Fifteen Million Merits” may be one of the best dystopian interpretations of our modern attitude towards commercials.

In this world, people pass their time inside towers that they can’t escape. They ride stationary bikes all day to generate power and collect currency called “Merit”.

“Merits” are used to pay for everything, including the ability to skip annoying ads displayed on pretty much every surface.

Read More: 5 Lessons From This Netflix Early Investor

In the real world, we don’t pedal on exercise bikes to power society ‒ although that would be a noble undertaking.

However, we are subject to frequent “intrusion” advertisement in TV, social media and the internet at large.

In streaming services, people found an escape from such commercials that intrude on their favorite video content.

However, streaming services aren’t immune to disruptive ads formats that we, unfortunately, can’t buy our way out of.

In-Stream “Pause” ads: Audience Inattention

Streaming services buy video content, or fund their own projects, which they then monetize with TV consumers.

However, subscriptions alone can’t cover all the expenses. Streaming services know this and also have to rely on the very lucrative advertising revenues.

These companies have to walk a fine line between keeping customers satisfied and keeping their business financially sound.

For some companies, this means introducing “non-intrusive commercials” to their services.

Per Variety, Hulu and AT&T plan to introduce a new ad format with commercials running as the TV viewer hits the pause button sometime next year.

The “paused ads”, so called by Hulu, will hijack the screen when a subscriber pauses the service to go to the bathroom, grab a snack, or answer the phone.

Hulu considers pausing to be “a natural break in the storytelling experience” as binge-viewing happens more and more”. They see this new ad format as a natural response to changing consumer habits.

Back in September, AT&T held an event, Relevance Conference, to announce the launch of Xandr, a new advertising company to oversee all AT&T’s advertising and analytics businesses.

“We know you’re going to capture 100% viewability when they pause and unpause,” says Matt Van Houten, vice president of product at Xandr. “There’s a lot of value in that experience.”

For Brian Lesser, Xandr’s CEO, there’s no way around ads for them to meet quality and quantity demand.

“If we are to continue this pace of developing content of this quality in these volumes, then we need advertising to pay for some of the content,” said Lesser at the event. “I don’t believe – nor does anybody on the team believe – that subscription video on demand services could possibly pay for all the content being developed.”

If it wasn’t for ad dollars, streaming your favorite shows would have been more pricey. Hulu, for example, has a no commercials plan for those willing to pay more for an ad-free experience.

Would these pause commercials bother you, if you paused to shift your focus from the screen for whatever reason?

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Zayan Guedim

Trilingual poet, investigative journalist, and novelist. Zed loves tackling the big existential questions and all-things quantum.

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