Will Future Premium Video Deals Include Ad Time?

Growing set-top box provider/platform Amazon Fire TV may be angling for the next round of deals to carry channels, especially those that aren’t ad-supported, with a new deal point wrinkle: ad time.

All this comes as we have an eye-opening moment about a possible Disney+ carriage deal with Amazon Fire TV -- one that might include possible advertising time on the Disney+ channel, sold by Amazon. Disney+, a subscription service, isn’t being launched to include TV commercials around or in its content.

Disney’s intention is to be more like Netflix, Apple TV+ and other subscription-based platforms that don't carry TV commercials. But there is concern Disney+ might see some form of advertising connection.

It’s no secret Amazon is building a sizable advertising business -- not just with Amazon Fire TV or its related digital TV effort, Amazon Channels, but around all its ecommerce platforms.



Reports focus on this: If subscribers want ad-supported channels/video service carried on Amazon Fire TV, they will need to fork over 30% to 40% of their hourly advertising time to Amazon.

All this would be a sizable piece of a channel’s advertising revenue. Looking at legacy pay TV providers -- cable, satellite or telco deals -- those services get two-minutes per hour of commercial time from TV networks -- roughly 10% of all noncontent programming. By way of comparison, Roku grabs around 15%, according to analysts.

Now ask yourself about new carriage deals for HBO Now, Showtime, Starz or Netflix -- subscription-based video channels that can charge customers anywhere from $10 to $16 a month. This has been the price point for decades -- what traditional cable premium networks (through pay TV providers) have charged subscribers.

If Amazon made an attempt to grab some advertising time from Disney+, what is to stop it from trying to do the same with Netflix, Showtime, Hulu's ad-free option or others?

Some may guess Amazon’s entry way into this might be via pre-roll, post-roll advertising, something that doesn’t interfere with the continuous airing of a TV show. Even then, it would set off alarm bells.

That said, traditional media companies have positioned premium digital video strategies to include advertising-options. HBO Max has talked about this. NBCU’s Peacock also looks to makes advertising a central part of its plan when it launches next year -- with the possibility of being a free service, per reports.

Why all these options? Major legacy TV companies aren’t sure how the streaming business will mature -- especially with billions of dollars in content costs on the line, as well as some intense competition among big new players and thousands of other media alternatives.

Will consumers adjust to this? Will longtime ad-free brands -- HBO, Showtime and Netflix -- have to make adjustments in light of a powerful ecommerce company and a rising TV entertainment distribution business?

It’s Amazon. It is a jungle out there.

1 comment about "Will Future Premium Video Deals Include Ad Time?".
Check to receive email when comments are posted.
  1. Ed Papazian from Media Dynamics Inc, November 12, 2019 at 10:37 a.m.

    Wayne, how would Amazon format its commercials if it actually sold ads in 40-50% of the program time supplied by a content supplier? Would the average "break" consist of 10-15 minutes of ads? Would any advertiser in his/her right mind opt into such a hopelessly cluttered situation?

Next story loading loading..