Digital Media Ponders Line Extensions -- With Or Without Advertising

OK, Netflix, take a look around you. The ad-supported social media platform Facebook is mulling: an ad-free subscription. So... might you think of going in the other direction?

Analyze the possibility of offering an ad-supported video service to complement the biggest, most dominant ad-free premium subscription video service, and here is where one stands.

For Netflix, this would be very long odds, according to analysts — and with a zero chance of this happening via any Netflix executive's public comment.

Now take a step back: We should look at Facebook differently than Netflix — the former not necessarily offering “premium” media content. (Some may disagree.)

Note that Netflix’s longtime predecessor-of-a-kind — HBO — never considered a line extension with an ad-supported cable network. It made — and continues to make — tons of money, and much more than many ad-supported TV network groups.



But it is a different media model now. Fractionalization of viewing is happening everywhere. Recent news about Hulu could swing things in a new direction.

Here we have a premium video platform that has both: A subscription fee/ad-free platform -- as well as one that also benefits from being an ad-supported on-demand platform. In addition, it has a new vMVPD service — a live, liner package of networks — where Hulu gets to sell a limited number of commercial inventory avails on those networks.

In 2017, Hulu pulled in $1 billion in advertising. Not exactly chump change — although still chump change compared to big digital media companies coffers!

No word whether Netflix wants to join the vMVPD game — which focuses on live, linear TV content. But that could be a new kind of product, separate from its subscription fee/ad-free on-demand platform, with few conflict issues for existing Netflix subscribers.

Sound crazy? Right now, Netflix is still growing by major leaps. At some point, however, it might need a new TV-video-related business for new revenue growth. But it probably can’t wait too long to move, since those vMVPDs are staking new ground.

All options on the table — and on the screen — will stare down new digital media and traditional media companies. Those moving quickly — with bold shelf-space expanding plans — could win.

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