The content libraries of many SVOD (subscription on demand) platforms are getting exhausted by viewers who have been bingeing nonstop due to COVID and post-COVID. The resulting behavior has consumers looking to FAST and MVPD platforms to consume new or live content that present more of a hybrid to strict library models.
Pamela Adlon in a recent interview with Hollywood Reporter suggested that viewers would be better served watching her show Better Things on ad-free platforms than in an ad-supported model because the content can play through, and it would be viewed in a manner she intended. "Don’t watch it on FX with commercials," she said. "I'll throw up. There's nothing more dehumanizing than watching an episode of my show with commercial breaks."
If many directors and producers take this approach, then how will platforms and programmers pay for the content they create? Many industry leaders have been outspoken about the rising costs to keep a fresh library of content. Netflix shells out millions on content with the hope to monetize through subscribers, but they cannot continue to do so as more and more platforms enter the market. Netflix and others must either cut back or find alternative ways to fund the content. Why do people like Adlon not recognize this? There simply must be a value exchange to fund the content.
Perhaps Adlon would have a different POV if ads were more relevant, or the ad-load was smaller? Platforms like Peacock are experimenting with lighter ad-loads while charging higher CPMs to advertisers for them. This approach of higher costs is good for NBC, but may not work for advertisers, especially those who have left digital and come back to TV for its newfound internet connectivity and measurability.
Viewers have proven that they are willing to share a fair exchange for value in ad-supported models when the ads are relevant, or ad load is lighter.
There is little question that our industry must strike a balance between ad-supported and free or higher priced content, as well as on what is a fair CPM for the ad-supported models. Frankly, the costs will be dictated by the market. Several platforms that launched during COVID including Paramount+, Peacock, discovery+ and HBO Max have already faced price pressure from the market and adjusted course.
The next several months, the political cycle and the 2022 Upfront will foreshadow what the future holds.
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