Seth Shapiro's Business Innovation Blog

When Netflix subscribers were hit with promos that played in between episodes of the series they were watching, the reaction was harsh and swift.

CEO Reed Hastings has sworn the streaming giant will never run ads or enter the live-streaming or sports arenas. However, the company has been testing promos that play in between episodes of a series, displacing previews for the next episode.

And it’s not only promos that are creeping into streamers’ screens. YouTube recently announced that all creators in their YouTube Partner program can now turn on non-skippable ads for their videos.

Amazon is also launching a free, ad-supported service for its Fire TV customers. They also announced that Twitch Prime members will no longer get ad-free viewing and will have to upgrade to their $9.99 per month turbo level to do so.

It’s an open question whether the ad-free paradise streaming video promised will become a reality. Most streaming companies are running at a loss, and many of them are owned by a parent company that has so far given their subsidiaries a long leash. For example, YouTube is owned by Google, DirectTV Now is owned by AT&T, Sling TV is owned by Dish Network, and Hulu will soon be owned by Disney. Turning these streaming services into profitable business will be no small task, with most of them betting on economies of scale or the traditional TV ad model failing to reach profitability. No matter, it will take years to sort out and it seems as though ads will always be part of the streaming experience in order for SVOD services to reach profitability.

Leave a Reply