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Prime Video subs will soon see ads for Amazon products when they hit pause

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Amazon’s ad affinity —

Amazon is adding three types of shoppable ads to Prime Video’s ad tier.

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A scene from the Prime Video original series <em>Fallout</em>.” src=”https://cdn.arstechnica.net/wp-content/uploads/2024/05/fallout-800×334.jpg”></img><figcaption> <p><a data-height=Enlarge / A scene from the Prime Video original series Fallout.

Amazon Prime Video subscribers will see new types of advertisements this broadcast year. Amazon announced today that it’s adding new ad formats to its video streaming service, hoping to encourage people to interact with the ads and shop on Amazon.

In January, Prime Video streams included commercials unless subscribers paid $3 extra per month. That has meant that watching stuff on Prime Video ad-free costs $12 per month or, if you’re also a Prime subscriber, $18 per month.

New types of Prime Video ads

Amazon has heightened focus on streaming ads this year. Those who opted for Prime Video with commercials will soon see shoppable carousel ads, interactive pause ads, and interactive brand trivia ads, as Amazon calls them. Amazon said that advertisers could buy these new displays to be shown “across the vast majority of content on Prime Video, wherever it’s streamed.” All the new ad formats allow a viewer to place advertised products in their Amazon cart.

With carousel ads, subscribers will be pushed to shop “a sliding lineup of” products during ad breaks during shows and movies, Amazon said, adding: “The ad automatically pauses so that customers can browse, and automatically resumes play when ad interaction has stopped.”

The pause ads will be visible during Prime Video TV shows, movies, and live sports. These types of ads have been around since Hulu introduced them in 2019. Since they can show up whenever someone hits the pause button, these displays mean that Prime Video users will see ads beyond their scheduled breaks.

In Prime Video’s case, pausing the program will bring up “a translucent ad featuring brand messaging and imagery, along with an ‘Add to Cart’ and ‘Learn More'” overlay, per Amazon. Advertisers can also use pause ads to acquire voluntary viewers’ email addresses (so viewers can “get more information,” per Amazon).

Amazon trivia-themed ads will also appear during shows, movies, and live sports. The ad will try to sell stuff by offering “rewards like Amazon shopping credits.”

Amazon’s ad business is growing

Amazon is already one of the three biggest digital advertising firms (in addition to Alphabet and Meta). But its interest in using its streaming service to sell ad space has grown as ad dollars continue shifting away from linear, traditional TV platforms. The streaming industry has been trying to capitalize on advertisers’ growing interest with new ad types that users can shop from. Amazon research from 2023 claims that interactive ads increase product page views and conversions for products sold on Amazon tenfold.

On the other hand, Amazon has not released research publicly on how much constant ad viewing can impact the user experience or interest in a streaming service.

Still, Amazon claimed today that Prime Video ads reach an average of 200 million people monthly. Amazon hasn’t provided a firm figure on how many Prime Video subscribers it currently has overall, however. In 2021, Amazon said that Prime, which includes Prime Video, had 200 million subscribers.

Amazon has, however, boasted about how well it is selling ads recently. In its Q1 2024 earnings report released on April 30, Amazon said its ad business grew 24 percent year over year. Most of Amazon’s ad dollars come from its retail business, as The Hollywood Reporter noted, but in a statement at the time, Amazon CEO and President Andy Jassy noted that Prime Video was also a contributor.

According to a Hub Media Entertainment survey from January to March 2024, 6,338 US TV viewers between 16 to 74 years old watched at least one hour of TV per week, and 85 percent of Prime Video subscribers in the survey are on Amazon’s ad tier. (Amazon hasn’t confirmed those figures.) The Hub Entertainment Media survey claims that Amazon has a higher ad-based-to-ad-free ratio of subscribers than all other video-streaming services examined, including Netflix, Max, and Hulu. But it’s worth noting that Amazon automatically moved all Prime Video subscribers to its ad tier in January, while others, like Netflix, introduced ad tiers as a new option to sign up for.

A fine line

Like all streamers, Amazon is toeing a fine line between using ads to boost the average revenue it makes per user and aggravating subscribers to the point of cancellation.

Amazon is already facing a lawsuit regarding ads on Prime Video that seeks class-action certification and was filed by people who purchased annual subscriptions.

Prime Video subs will soon see ads for Amazon products when they hit pause Read More »

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All the ways streaming services are aggravating their subscribers this week

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man watching TV, holding face

Streaming services like Netflix and Peacock have already found multiple ways to aggravate paying subscribers this week.

The streaming industry has been heating up. As media giants rush to establish a successful video streaming business, they often make platform changes that test subscribers’ patience and the value of streaming.

Below is a look at the most exasperating news from streaming services from this week. The scale of this article demonstrates how fast and frequently disappointing streaming news arises. Coincidentally, as we wrote this article, another price hike was announced.

We’ll also examine each streaming platform’s financial status to get an idea of what these companies are thinking (spoiler: They’re thinking about money).

Peacock’s raising prices

For the second time in the past year, NBCUniversal is bumping the price of Peacock, per The Hollywood Reporter (THR) on Monday.

As of July 18, if you try to sign up for Peacock Premium (which has ads), it’ll cost $7.99 per month, up from $5.99/month today. Premium Plus, (which doesn’t have ads), will go up from $11.99/month to $13.99/month. Annual subscription pricing for the ad plan is increasing 33.3 percent from $59.99 to $79.99, and the ad-free annual plan’s price will rise 16.7 percent from $119.99/year to $139.99/year.

Those already subscribed to Peacock won’t see the changes until August 17, six days after the closing ceremony of the 2024 Summer Olympics, which will stream on Peacock.

The pricing changes will begin eight days before the Olympics’ opening ceremony. That means that in the days leading up to the sporting event, signing up for Peacock will cost more than ever. That said, there’s still time to sign up Peacock for its current pricing.

As noted by THR, the changes come as NBCUniversal may feel more confident about its streaming service, which now includes big-ticket items, like exclusive NFL games and Oppenheimer (which Peacock streamed exclusively for a time), in addition to new features for the Olympics, like multiview.

Some outspoken subscribers, though, aren’t placated.

“Just when I was starting to like the service,” Reddit user MarkB1997 said in response to the news. “I’ll echo what everyone has been saying for a while now, but these services are pricing themselves out of the market.”

Peacock subscribers already experienced a price increase on August 17, 2023. At the time, Peacock’s Premium pricing went from $4.99/month to $5.99/month, and the Premium Plus tier from $9.99/month to $11.99/month.

Peacock’s pockets

Peacock’s price bumps appear to be a way for the younger streaming service to inch closer to profitability amid a major, quadrennial, global event.

NBCUniversal parent company Comcast released its Q1 2024 earnings report last week, showing that Peacock, which launched in July 2020, remains unprofitable. For the quarter, Peacock lost $639 million, compared to $825 million in Q4 2023 and $704 million in Q1 2023. Losses were largely attributed to higher programming costs.

Peacock’s paid subscriber count is lower than some of its rivals. The platform ended the quarter with 34 million paid users, up from 31 million at the end of 2023. Revenue also rose, with the platform pulling in $1.1 billion, representing a 54 percent boost compared to the prior year.

Sony bumps Crunchyroll prices weeks after shuttering Funimation

Today, Sony’s anime streaming service Crunchyroll announced that it’s increasing subscription prices as follows:

  • The Mega Fan Tier, which allows streaming on up to four devices simultaneously, will go from $9.99/month to $11.99/month
  • The Ultimate Fan Tier, which allows streaming on up to six devices simultaneously, will go from $14.99/month to $15.99/month

Crunchyroll’s cheapest plan ($7.99/month) remains unchanged. None of Crunchyroll’s subscription plans have ads. Crunchyroll’s also adding discounts to its store for each subscription tier, but this is no solace for those who don’t shop there on a monthly basis or at all.

The news of higher prices comes about a month after Sony shuttered Funimation, an anime streaming service it acquired in 2017. After buying Crunchyroll in 2021, Funimation was somewhat redundant for Sony. And now that Sony has converted all remaining Funimation accounts into Crunchyroll accounts (while deleting Funimation digital libraries), it’s forcing many customers to pay more to watch their favorite anime.

A user going by BioMountain on Crunchyroll said the news is “not great,” since they weren’t “a big fan of having to switch from Funimation to begin with, especially since that app was so much better” than Crunchyroll.

Interestingly, when Anime News Network asked on February 29 whether Crunchyroll would see prices rise over the next two years, the company told the publication that predicting a price change for that time frame would be improbable.

Crunching numbers

Crunchyroll had 5 million paid subscribers in 2021 but touted over 13 million in January, (plus over 89 million unpaid users, per Bloomberg). Crunchyroll president Rahul Purini has said that Crunchyroll is profitable, but not by how much.

In 2023, Goldman Sachs estimated that Crunchyroll would represent 36 percent of Sony Pictures Entertainment’s profit by 2028, compared to about 1 percent in March.

However, Purini has shown interest in growing the company further and noted to Variety in February an increase in “general entertainment” companies getting into anime.

Still, anime remains a more niche entertainment category, and Crunchyroll is more specialized than some other streaming platforms. With Sony making it so that anime fans have one less streaming service option and jacking up the prices for one of the limited options, it’s showing that it wants as much of the $20 billion anime market as possible.

Crunchyroll claimed today that its pricing changes are tied to “investment in more anime, additional services like music and games, and additional subscriber benefits.”

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Roku OS home screen is getting video ads for the first time

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the price of cheap streaming —

Meanwhile, Roku keeps making more money.

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roku home screen

Roku

Roku CEO Anthony Wood disclosed plans to introduce video ads to the Roku OS home screen. The news highlights Roku’s growing focus on advertising and an alarming trend in the streaming industry that sees ads increasingly forced on viewers.

As spotted by The Streamable, during Roku’s Q1 2024 earnings call last week, Wood, also the company’s founder and chairman, boasted about the Roku OS home screen showing users ads “before they select an app,” avoiding the possibility that they don’t see any ads during their TV-viewing session. (The user might only use Roku to access a video streaming app for which they have an ad-free subscription.)

Wood also noted future plans to make the Roku home screen even more ad-laden:

On the home screen today, there’s the premier video app we call the marquee ad and that ad traditionally has been a static ad. We’re going to add video to that ad. So that’ll be the first video ad that we add to the home screen. That will be a big change for us.

Wood’s comments didn’t address the expected impact on the Roku user experience or whether the company thinks this might turn people off its platform. In December, Amazon made a similar move by adding autoplay video ads to the home screen of the Fire OS (which third-party TVs and Amazon-branded Fire TV sets and streaming devices use). Fire OS users who disable the ads’ autoplay function will still see ads as “a full-screen slide show of image ads,” per AFTVnews. Some users viewed the introduction as an intrusive step that went too far, and Roku may hear the same feedback.

During Roku’s earnings call, Wood also said the company is testing “other types of video ad units” and is looking for more ways to bring advertising to the Roku OS home screen.

This comes after recent efforts to expand ad presence on Roku OS, including through new FAST (free ad-supported streaming TV) channels and by putting content recommendations on the home screen for the first time, per Wood, who said the personalized content row “will be, obviously, AI-driven recommendations.”

“There’s lots of ways we’re working on enhancing the home screen to make it more valuable to viewers but also increase the monetization on the home screen,” he said.

Roku’s revenue rise

Roku saw its average revenue per user (ARPU) drop from $41.03 in Q3 of its 2023 financial year to $39.92 in Q4 2023 (in Q4 2022, the company reported an ARPU of $41.68). Last week, Roku reported that ARPU, a key metric for the streaming industry these days, rose to $40.65 in Q1 2024. Meanwhile, Roku’s active account count rose by 1.6 million users from the prior quarter to 81.6 million.

“Roku has a direct relationship with more than 81 million Streaming Households, and we are deepening relationships with third-party platforms, including [demand side platforms], retail media networks, and measurement partners. Our business remains well positioned to capture the billions of dollars in traditional TV ad budgets that will shift to streaming,” an April 25 letter to shareholders [PDF] authored by Wood and Roku CFO Dan Jedda reads.

Like many streaming companies, a shift toward ads has resulted in higher revenue potential and user discontent. In its Q1 2024 results, Roku reported that revenue for its Devices business reached $126.5 million, compared to $754.9 for its Platform business, which drives most of its revenue through ad sales, representing a 19 percent year-over-year (YoY) increase. Overall, revenue rose 19 percent YoY to $882 million, and Roku’s gross profit grew 15 percent YoY to $388 million.

But growing revenue doesn’t equate to an improved user experience. For example, an Accenture survey of 6,000 “global consumers” noted by The Streamable found that 52.2 percent of participants thought that streaming platform-recommended content “did not match their interests.” Similarly, an October TiVo survey of 4,500 viewers in the US and Canada ranked “streaming apps / home screen / carousel ads” as the fourth most popular method of content discovery, after word of mouth, commercials aired during other shows, and social media. While Roku is a budget brand associated with more affordable TVs and streaming devices, excessive ads could make people reconsider the true price of these savings.

Despite people’s ad aversion, Roku intends to find more ways to drive advertising opportunities. Among those ideas being explored is the ability to show ads over anything plugged into the TV.

Roku OS home screen is getting video ads for the first time Read More »

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Reddit, AI spam bots explore new ways to show ads in your feed

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BRAZIL - 2024/04/08: In this photo illustration, a Reddit logo seen displayed on a computer screen through a magnifying glass

Reddit has made it clear that it’s an ad-first business. Today, it expanded on that practice with a new ad format that looks to sell things to Reddit users. Simultaneously, Reddit has marketers who are interested in pushing products to users through seemingly legitimate accounts.

In a blog post today, Reddit announced that its Dynamic Product Ads are entering public beta globally. The ad format uses “shopping signals,” aka discussions with people looking to try a product or brand, machine learning, and advertiser product catalogs in order to post relevant ads. Reddit shared an image in the blog post that shows ads, including with products and pricing, that seem to relate to a posted question. User responses to the Reddit post appear under the ad.

  • A somewhat blurry depiction of the new type of ads Reddit is testing.

  • A (still blurry) example of a more targeted approach to Reddit’s new ad format.

Reddit’s Dynamic Product Ads can automatically show users ads “based on the products they’ve previously engaged with on the advertiser’s site” and/or “based on what people engage with on Reddit or advertiser sites,” per the blog.

Reddit is an ad business

Reddit’s blog didn’t imply that Dynamic Product Ads means users would see more ads than they do currently. However, today’s blog highlighted the newly public company’s focus on ad sales.

“With Dynamic Product Ads, brands can tap into the rich, high-intent product conversations that people come to Reddit for,” Reddit EVP of Business Marketing and Growth Jim Squires said in a statement.

The blog also noted that “Reddit’s communities are naturally commercial,” adding:

Reddit is where people come to make shopping decisions, and we’re focused on bringing brands into these interactions in a way that adds value for people and drives growth for businesses.

The stance has been increasingly clear over the past year, as Reddit became rather vocal about the fact that it’s never been profitable. In June, the company started charging for API access, resulting in numerous valued third-party Reddit apps closing and messy user protests that left a bad taste in countless long-time users’ and moderators’ mouths. While Reddit initially announced the change as a way to prevent large language models from using its data for free training, it was also seen as a way to drive users to Reddit’s website and mobile app, where it can serve users ads.

Per Reddit’s February SEC filing (PDF), ads made up 98 percent of Reddit’s revenues in 2023 and 2022. That filing included a note from CEO Steve Huffman, saying: “Advertising is our first business” and that Reddit’s ad business is “still in the early phases of growing.”

In September, the company started preventing users from opting out of personalized ads. In June, Reddit introduced a new tool to advertisers that uses natural language processing to look through Reddit user comments for keywords that signal potential interest for a brand.

Reddit’s blog post today hinted at some future evolutions focused on showing Reddit users ads, including “tools and features such as new shopping ads formats like collection ads that enhance the shopper experience while driving performance” and “merchant platform integrations that welcome smaller merchants.”

Reddit, AI spam bots explore new ways to show ads in your feed Read More »

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The lines between streaming and cable continue to blur

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Here we go again —

Disney+ to offer 24/7 channels to play Star Wars content, commercials.

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O.B., aka Ouroboros, in Marvel's <em>Loki</em> show, which streams on Disney+.” src=”https://cdn.arstechnica.net/wp-content/uploads/2024/04/ARC-201-10072_R-1200×800-5b2df79-800×533.jpg”></img><figcaption> <p><a data-height=Enlarge / O.B., aka Ouroboros, in Marvel’s Loki show, which streams on Disney+.

Despite promises of new and improved TV and movie viewing experiences, streaming services remain focused on growing revenue and app usage. As a result of that focus, streaming companies are mimicking the industry they sought to replace—cable.

On Monday, The Information reported that Disney plans to add “a series” of channels to the Disney+ app. Those channels would still be streamed and require a Disney+ subscription to access. But they would work very much like traditional TV channels, featuring set programming that runs 24/7 with commercials. Disney hasn’t commented on the report.

Disney is exploring adding channels to Disney+ with “programming in specific genres, including either Star Wars or Marvel-branded shows,” The Information said, citing anonymous “people involved in the planning.” It’s unknown when the Disney+ channels are expected to launch.

The report comes as streaming services continue trying to find ways to capitalize off cable companies’ customer base. NBCUniversal’s Peacock streaming service already offers subscribers over 50 always-on live channels. Hulu and Paramount+ offer live TV with cable channels. Streaming platforms are also eager to license content normally delegated to traditional TV channels, including old shows like Suits, the 2023 streaming record-setter, and live sporting events like WWE Raw.

Channel surfing 2.0

If you’ve followed the streaming industry lately, you won’t be surprised to hear that ad dollars are reportedly behind the push for live channels. Disney+, like many streaming services, aims to be profitable by the end of Disney’s 2024 fiscal year and extract as much revenue from each subscriber as possible (including by using tactics like password crackdowns) to fuel profits.

The news follows similar moves by Disney, including adding Hulu to the Disney+ app, as well as plans to add ESPN to Disney+, too, according to The Information. Disney is also attempting to launch a joint sports-streaming app with Fox and Warner Bros. Discovery (WBD). It’s not hard to imagine Disney one day (assuming the app ever debuts) making the sports app’s content accessible through Disney+.

“The idea is to make Disney+ a service that has something for everyone, anytime,” The Information reported.

That sounds an awful lot like cable, which spent years growing customers’ monthly bills by adding more channels and bundles aimed at specific interests, like children’s entertainment, sports, and lifestyle. The ability to hop from on-demand Disney kids’ movies to on-demand sitcoms on Hulu to live programming centered on (the seemingly endless piles of) Marvel and Star Wars content feels a lot like channel surfing. It wasn’t too long ago when channel surfing was viewed as a time-suck.

Netflix has also reportedly considered ways to unite other streaming platforms with Netflix in order to extend the amount of time spent on Netflix. In late 2022, Netflix “explored creating a store within its app for users to subscribe to and watch other streaming services, all without leaving the Netflix app,” The Information said, citing an unnamed person “who was involved in those exploratory discussions.” Netflix reportedly decided not to move ahead with the plans for now but still could. It hasn’t commented on The Information’s report.

As we saw with Netflix’s password crackdown and streaming’s shift to ads, streaming companies tend to copy each other’s strategies for revenue growth. And live channels could be something more streaming companies get involved in, as WBD and Amazon, as examples, already have (albeit separate from their flagship, on-demand streaming apps, which differs from what Disney+’s live channel reportedly will reportedly be like).

Disney, notably, is no stranger to the business of online live channels, having 21 similar offerings within the ABC.com app, including a channel for ABC News and another for General Hospital.

Subscription-based streaming services may even have an easier time competing for ad dollars than free, ad-supported TV (FAST) streaming channels, such as those on Tubi and Pluto TV. Susan Schiekofer, chief digital investment officer for GroupM, the top US ad-buying company, told The Information that advertisers might feel more comfortable allotting dollars to ad-supported channels that are tied to users who have already spent money on a subscription.

Streaming services initially were a way to get only the content you wanted on demand and commercial-free. But the report about Disney+ and Netflix are just two examples of growing interest in reinvigorating the strategies of linear TV. Instead of jumping from network to network within cable, there’s interest in getting people to jump from one streaming service to another within one platform—with plenty of commercials along the way.

The lines between streaming and cable continue to blur Read More »

Roku has patented a way to show ads over anything you plug into your TV

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giving us pause —

System would detect paused content on external devices and show ads on top.

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A promotional image for a Roku TV.

Enlarge / A promotional image for a Roku TV.

Roku TV sets come with ads. Generally, these are restricted to Roku’s home and menu screens, its screensavers, and its first-party video channels, and once you start playing video, the only ads you’ll see are the ones from the service you’re streaming from. That said, Roku TVs have shown ads atop live TV before.

Now, the company is apparently experimenting with ways to show ads over top of even more of the things you plug into your TV. A patent application from the company spotted by Lowpass describes a system for displaying ads over any device connected over HDMI, a list that could include cable boxes, game consoles, DVD or Blu-ray players, PCs, or even other video streaming devices. Roku filed for the patent in August 2023 and it was published in November 2023, though it hasn’t yet been granted.

The technology described would detect whether content was paused in multiple ways—if the video being displayed is static, if there’s no audio being played, if a pause symbol is shown anywhere on screen, or if (on a TV with HDMI-CEC enabled) a pause signal has been received from some passthrough remote control. The system would analyze the paused image and use metadata “to identify one or more objects” in the video frame, transmit that identification information to a network, and receive and display a “relevant ad” over top of whatever the paused content is.

The proposed Roku device would include multiple modules dedicated to detecting and analyzing onscreen content and inserting ads over top of an existing video stream.

Enlarge / The proposed Roku device would include multiple modules dedicated to detecting and analyzing onscreen content and inserting ads over top of an existing video stream.

Roku

This theoretical Roku TV’s internal hardware would be capable of taking the original source video feed, rendering an ad, and then combining the two into a single displayed image. Combining those video streams could enable both static or animated ads, according to the patent.

Patents are just patents. A filed and granted patent isn’t the same thing as a concrete plan to actually implement the technology described in the patent. We could see this feature come to future Roku TV sets exactly as described, or we could never hear about it again. Everything from the cost of implementing the feature, to difficulty making it work in real life the way it works on paper, to user and partner backlash could dissuade Roku from putting this into practice.

But Roku the company is highly motivated to figure out more ways to make more money from more ads on Roku devices. Among the business risks disclosed on Roku’s financial filings from its 2023 fiscal year (PDF), the company says that its “future growth depends on the acceptance and growth of streaming TV advertising and advertising platforms.”

Roku's proposed workflow for detecting paused content and displaying an ad on top of it.

Enlarge / Roku’s proposed workflow for detecting paused content and displaying an ad on top of it.

Roku

If implemented as described, this system both gives Roku another place to put ads, and gives the company another source of user data that can be used to encourage advertisers to spend on its platforms. Roku also anticipates that the general shift toward ad-supported streaming tiers that we’ve seen in the last couple of years will “shift… ad dollars from traditional TV to streaming,” (PDF) and having more places to put ads will put Roku in a better position to capitalize on that shift.

It’s unclear whether this kind of feature could be enabled on currently supported Roku TVs with a software update, or if it would require a newer set with newer hardware in it. It seems as though a Roku TV that was capable of this kind of ad insertion would need more sophisticated internal hardware than most current sets currently come with—this is the same company that feuded with Google a few years back because it didn’t want to pay for more-expensive chips that could decode Google’s AV1 video codec.

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Discord starts down the dangerous road of ads this week

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Sponsored Quests —

Discord’s first real foray into ads seems minimally intrusive.

– Updated

The Discord logo on a funky cyber-background.

Discord

Discord had long been strongly opposed to ads, but starting this week, it’s giving video game makers the ability to advertise to its users. The introduction of so-called Sponsored Quests marks a notable change from the startup’s previous business model, but, at least for now, it seems much less intrusive than the ads shoved into other social media platforms, especially since Discord users can choose not to engage with them.

Discord first announced Sponsored Quests on March 7, with Peter Sellis, Discord’s SVP of product, writing in a blog post that users would start seeing them in the “coming weeks.” Sponsored Quests offer PC gamers in-game rewards for getting friends to watch a stream of them playing through Discord. Discord senior product communications manager Swaleha Carlson confirmed to Ars Technica that Sponsored Quests launch this week.

Discord shared this image in March as an example of the new type of ads.

Enlarge / Discord shared this image in March as an example of the new type of ads.

The goal is for video games to get exposure to more gamers, serving as a form of marketing. On Saturday, The Wall Street Journal (WSJ) reported that it viewed a slide from a slideshow Discord shows to game developers regarding the ads that reads: “We’ll get you in front of players. And those players will get you into their friend groups.”

Sellis told WSJ that Discord will target ads depending on users’ age, geographic location data, and gameplay. The ads will live on the bottom-left of the screen, but users can opt out of personalized promotions for Quests that are based on activity or data shared with Discord, Swaleha Carlson, senior product communications manager at Discord, told Ars Technica.

“Users may still see Quests, however, if they navigate to their Gift Inventory and/or through contextual entry points like a user’s friends’ activity. They’ll also have the option to hide an in-app promotion for a specific Quest or game they’re not interested in,” she said.

“Users may still see Quests, however, if they navigate to their Gift Inventory and/or through contextual entry points like a user’s friends’ activity. They’ll also have the option to hide an in-app promotion for a specific Quest or game they’re not interested in. “

Discord already tested the ads in May with Lucasfilm Games and Epic Games. Discord users were able to receive Star Wars-themed gear in Fortnite for getting a friend to watch them play Fortnite on PC for at least 15 minutes.

Jason Citron, Discord co-founder and CEO, told Bloomberg in March that the company hopes that one day “every game will offer Quests on Discord.”

Discord used to be anti-ads

It may be a nuisance for users to have to disable personalized promotion for Sponsored Quests when they never asked for them, but it should bring long-term users at least some comfort that their data purportedly doesn’t have to contribute to the marketing. However, it’s unclear if Discord may one day change this. The fact that the platform is implementing ads at all is somewhat surprising. Discord named its avoidance of advertising as one of its key differentiators from traditional social media platforms as recently as late January.

In March 2021, Citron told WSJ that Discord had eschewed ads until that point because ads would be intrusive, considering Discord’s purpose of instant back-and-forth communication and people’s general distaste for viewing ads and having their data shared with other companies.

“We really believe we can build products that make Discord more fun and that people will pay for them. It keeps our incentives aligned,” Citron told WSJ at the time.

That same year, Citron, in response to a question about why being ad-free is important to Discord, told NPR: “We believe that people’s data is their data and that people should feel comfortable and safe to have conversations and that their data is not going to be used against them in any way that is improper.”

Sponsored Quests differs from other types of ads that would more obviously disrupt Discord users’ experiences, such as pop-up ads or ads viewed alongside chat windows.

A tight-rope to walk

Beyond Sponsored Quests, Discord, which launched in 2015, previously announced that it would start selling sponsored profile effects and avatar decorations in the Discord Shop. In March, Discord’s Sellis said this would arrive in the “coming weeks.” Discord is also trying to hire more than 12 people to work in ad sales, WSJ said Saturday, citing anonymous “people familiar with [Discord’s] plans.”

Discord’s Carlson declined to comment to Ars on whether or not Discord plans to incorporate other types of ads into Discord. She noted that Sponsored Quests “are currently in the pilot phase” and that the company will “continue to iterate based on what we learn.”

In 2021, Discord enjoyed a nearly three-times revenue boost that it attributed to subscription sales for Nitro, which adds features like HD video streaming and up to 500MB uploads. In March, Citron told Bloomberg that Discord has more than 200 million monthly active users and that the company will “probably” go public eventually.

The publication, citing unnamed “people with knowledge of the matter,” also reported that Discord makes over $600 million in annualized revenue. The startup has raised over $1 billion in funding and is reported to have over $700 million in cash. However, the company reportedly isn’t profitable. It also laid off 17 percent of staffers, or 170 workers, in January.

Meanwhile, ads are the top revenue generator for many other social media platforms, such as Reddit, which recently went public.

While Discord’s first real ads endeavor seems like it will have minimal impact on users who aren’t interested in them, it brings the company down a tricky road that it hasn’t previously navigated. A key priority should be ensuring that any form of ads doesn’t disrupt the primary reasons people like using Discord. As it stands, Sponsored Quests might already put off some users.

“I don’t want my friendships to be monetized or productized in any way,” Zack Mohsen, a reported long-time user and computer hardware engineer based in Seattle, told WSJ.

Updated April 1, 2024 at 5: 32 p.m. ET to add information and comment from Discord. 

Discord starts down the dangerous road of ads this week Read More »

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Facebook let Netflix see user DMs, quit streaming to keep Netflix happy: Lawsuit

ads, antitrust, facebook, Meta, netflix, privacy, Social Media, streaming, Tech / /
A promotional image for Sorry for Your Loss, with Elizabeth Olsen

Enlarge / A promotional image for Sorry for Your Loss, which was a Facebook Watch original scripted series.

Last April, Meta revealed that it would no longer support original shows, like Jada Pinkett Smith’s Red Table Talk talk show, on Facebook Watch. Meta’s streaming business that was once viewed as competition for the likes of YouTube and Netflix is effectively dead now; Facebook doesn’t produce original series, and Facebook Watch is no longer available as a video-streaming app.

The streaming business’ demise has seemed related to cost cuts at Meta that have also included layoffs. However, recently unsealed court documents in an antitrust suit against Meta [PDF] claim that Meta has squashed its streaming dreams in order to appease one of its biggest ad customers: Netflix.

Facebook allegedly gave Netflix creepy privileges

As spotted via Gizmodo, a letter was filed on April 14 in relation to a class-action antitrust suit that was filed by Meta customers, accusing Meta of anti-competitive practices that harm social media competition and consumers. The letter, made public Saturday, asks a court to have Reed Hastings, Netflix’s founder and former CEO, respond to a subpoena for documents that plaintiffs claim are relevant to the case. The original complaint filed in December 2020 [PDF] doesn’t mention Netflix beyond stating that Facebook “secretly signed Whitelist and Data sharing agreements” with Netflix, along with “dozens” of other third-party app developers. The case is still ongoing.

The letter alleges that Netflix’s relationship with Facebook was remarkably strong due to the former’s ad spend with the latter and that Hastings directed “negotiations to end competition in streaming video” from Facebook.

One of the first questions that may come to mind is why a company like Facebook would allow Netflix to influence such a major business decision. The litigation claims the companies formed a lucrative business relationship that included Facebook allegedly giving Netflix access to Facebook users’ private messages:

By 2013, Netflix had begun entering into a series of “Facebook Extended API” agreements, including a so-called “Inbox API” agreement that allowed Netflix programmatic access to Facebook’s users’ private message inboxes, in exchange for which Netflix would “provide to FB a written report every two weeks that shows daily counts of recommendation sends and recipient clicks by interface, initiation surface, and/or implementation variant (e.g., Facebook vs. non-Facebook recommendation recipients). … In August 2013, Facebook provided Netflix with access to its so-called “Titan API,” a private API that allowed a whitelisted partner to access, among other things, Facebook users’ “messaging app and non-app friends.”

Meta said it rolled out end-to-end encryption “for all personal chats and calls on Messenger and Facebook” in December. And in 2018, Facebook told Vox that it doesn’t use private messages for ad targeting. But a few months later, The New York Times, citing “hundreds of pages of Facebook documents,” reported that Facebook “gave Netflix and Spotify the ability to read Facebook users’ private messages.”

Meta didn’t respond to Ars Technica’s request for comment. The company told Gizmodo that it has standard agreements with Netflix currently but didn’t answer the publication’s specific questions.

Facebook let Netflix see user DMs, quit streaming to keep Netflix happy: Lawsuit Read More »

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Walmart buying TV-brand Vizio for its ad-fueling customer data

acquisition, ads, Tech, TVs, Vizio, walmart / /

About software, not hardware —

Deal expected to close as soon as this summer.

–

Close-up of Vizio logo on a TV

Walmart announced an agreement to buy Vizio today. Irvine, California-based Vizio is best known for lower-priced TVs, but its real value to Walmart is its advertising business and access to user data.

Walmart said it’s buying Vizio for approximately $2.3 billion, pending regulatory clearance and additional closing conditions. Vizio can also terminate the transaction over the next 45 days if it accepts a better offer, per the announcement.

Walmart will keep selling non-Vizio TVs should the merger close, Seth Dallaire, Walmart US’s EVP and CRO who would manage Vizio post-acquisition, told The Wall Street Journal (WSJ).

Walmart expects the acquisition to be finalized as soon as this summer, it told WSJ.

Ad-pportunity

Walmart, including Sam’s Club, is typically Vizio’s biggest customer by sales, per a WSJ report last week on the potential merger. But Walmart’s acquisition isn’t about getting a bigger piece of the budget-TV market (Walmart notably already sells its own “onn.” budget TVs). Instead, Walmart is looking to boost its Walmart Connect advertising business.

Vizio makes money by selling ads, including those shown on the Vizio SmartCast OS and on free content available on its TVs with ads. Walmart said buying Vizio will give it new ways to appeal to advertisers and that those ad efforts would be further fueled by Walmart’s high-volume sales of TVs.

Walmart said today that Vizio’s Platform+ ad business has “over 500 direct advertiser relationships, including many of the Fortune 500” and that SmartCast users have grown 400 percent since 2018 to 18 million active accounts.

Walmart Connect (which was rebranded from Walmart Media Group in 2021) sells various types of ads, including adverts that appear on Walmart’s website and app. Walmart Connect also sells ads that display on in-store screens, including display TVs and point-of-sale machines, in over 4,700 locations (Walmart has over 10,500 stores).

Walmart makes most of its US revenue from low-profit groceries, WSJ noted last week, but ads are higher profit. Walmart has said that it wants Walmart Connect to be a top-10 advertising business. Alphabet, Amazon, and Meta are among the world’s biggest advertising companies today. In the fiscal year ending January 2023, Walmart said that its global ads business represented under 1 percent ($2.7 billion) of its total annual revenue. In its fiscal year 2024 Q4 earnings report released today [PDF], Walmart said its global ad business grew 33 percent, including 22 percent in the US, compared to Q4 2023.

Hungry for customer data

Owning Platform+ would give Walmart new information about TV users. Data gathered from Vizio TVs will be combined with data on shoppers that Walmart already gets. Walmart plans to use this customer data to sell targeted ad space, such as banners above Walmart.com search results, and to help advertisers track ad results.

With people only able to buy so many new TVs, vendors have been pushing for ways to make money off of already-purchased TVs. That means putting ads on TV OSes and TVs that gather customer data, including what users watch and which ads they click on, when possible. TV makers like Vizio, Amazon, and LG are increasingly focusing on ads as revenue streams.

Meanwhile, retailers like Walmart are also turning to ads for revenue. Through Vizio, Walmart is looking to add a business with the vast majority of gross profit coming from ads. Data acquired through SmartCast can shed light on ad effectiveness and improve ad targeting, Vizio tells advertisers.

In an interview with WSJ, Dallaire noted that smart TVs and streaming have turned the TV business into a software, not hardware, business. According to a spokesperson for Parks Associate that Ars Technica spoke with, Vizio has 12 percent of connected TV OS market share. WSJ reported last week that Roku OS has more market share at 25 percent; although, a graph that Parks Associates’ rep sent to me suggests the percentage is smaller (Parks Associates’ spokesperson wouldn’t confirm Roku OS’ market share or the accuracy of WSJ’s report to Ars). Roku OS is on Walmart’s “onn.” TVs, but Walmart doesn’t own Roku.

Vizio TVs could get worse

From the perspective of a company seeking to grow its ad business, buying Vizio seems reasonable. But from a user perspective, Vizio TVs risk becoming too centered on selling and measuring ads.

There was already a large financial incentive for Vizio to focus on growing Platform+ and the profitability of SmartCast (in its most recent earnings report, Vizio said its average revenue per SmartCast user increased 14 percent year over year to $31.55). For years, Vizio’s business has been more about selling ads than selling TVs. An acquisition focused on ads can potentially detract from a focus on improving Vizio hardware.

Stuffing more ads into TVs could also ruin the experience for people seeking a quality TV at a lower cost. While some people may be willing to sacrifice features and image quality to save money, others aren’t willing to deal with more ads and incessant interest in viewer tracking for that experience. With Vizio expected to become part of a conglomerate eager to grow its ad business, it’s possible that the ads experience on Vizio TVs could worsen.

Editor’s note: This article was edited to include information from Parks Associates. 

Walmart buying TV-brand Vizio for its ad-fueling customer data Read More »

netflix,-hungry-for-more-growth,-signals-more-price-hikes

Netflix, hungry for more growth, signals more price hikes

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“pay a little extra” —

Basic ad-free plan being ripped from subscribers in Canada, UK first.

–

Jason Bateman and Laura Linney in Ozark

Enlarge / Jason Bateman and Laura Linney in the Netflix original series Ozark.

Netflix subscribers can expect more price hikes as the company looks to grow revenue in 2024. In its Q4 2023 letter to shareholders, Netflix also revealed plans to eliminate the cheapest ad-free plan available to users.

In the January 23 letter (PDF), Netflix said:

As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service.

The statement will be unsavory for frugal streamers who have recently endured price hikes from Netflix and other streaming services. In January 2022, Netflix increased the price of its Basic no-ads tier from $8.99 per month to $9.99/month. In October 2023, that same plan went up to $11.99/month. Meanwhile, Netflix’s Premium ad-free plan increased from $17.99/month to $19.99/month in January 2022 and then to $22.99/month in October.

Netflix has attributed its price hikes to added features, like 4K streaming and gaming. But subscription fees remain the biggest source of revenue for Netflix, giving it obvious reason to leave a door open for even more price hikes in the near future.

Netflix has also used price hikes to encourage users to subscribe to its ad tier, where it has made more average revenue per user. Netflix with ads has cost $6.99/month since launching in November 2022 and has seen feature improvements, like moving from 720p resolution streams to 1080p.

Killing off the cheapest ad-free plan

In another attempt to push subscribers into watching ads on Netflix, the streaming company stopped offering new subscribers the aforementioned $11.99/month, ad-free Basic plan. It included 720p resolution, downloadable content, and support for one device. The change spiked the cheapest price for ad-free Netflix 55.06 percent to $15.49/month.

Netflix customers who were already subscribed to the ad-less Basic plan have been allowed to keep using it. But it seems like that grace period will soon end.

Netflix’s letter reads:

The ads plan now accounts for 40 percent of all Netflix sign-ups in our ads markets and we’re looking to retire our Basic plan in some of our ads countries, starting with Canada and the UK in Q2 and taking it from there.

Netflix originally cut the Basic plan in Canada before following suit in the US and UK. Combined with the fact that most of Netflix’s North American users are from the US, it’s expected that Netflix will cut the Basic plan in the US, too.

Netflix’s letter said ad membership grew when it stopped offering the Basic ad-free plan to new subscribers. Ad tier membership grew almost 70 percent quarter over quarter in Q4 2023. The tier has over 23 million subscribers, per Bloomberg.

During an earnings call on Tuesday, Netflix co-CEO Greg Peters noted Netflix’s 2024 priorities as including “pricing optimization” to help improve operating margins and grow revenue and its ad business.

Netflix’s ad business: years of work ahead

Netflix said this week that it has 260.28 million subscribers globally (for comparison, Disney+ has 66.1 million subscribers, Hulu 48.5 million, and Amazon Prime Video is estimated to have about 180.1 million). That’s after adding 13.1 million subscribers in Q4 2023, Netflix’s biggest Q4 yet.

But despite currently besting competitors in subscriber count and cash flow, Netflix faces similar challenges when it comes to wooing advertisers that may be unaccustomed to working with streaming services (which previously had limited advertising opportunities). While Netflix has seen revenue grow from other efforts, like password crackdowns and price hikes, it plans to focus heavily on scaling its ad business over the coming years.

“I’d say we got years of work ahead of us to take the ads business to the point where it’s a material impactor to our general business,” Peters said.

Netflix is already trying to strong-arm customers onto its ad plan. The streaming bundle plan that T-Mobile offers will no longer include ad-free Netflix. Anyone who had ad-less Netflix through a T-Mobile bundle is getting downgraded. Peters said this week that under the previous bundle, “it was hard to make the economics work for everyone.”

Ultimately, the amount of ad dollars up for grabs, including from the declining linear TV networks, is too tasty for streaming services to pass up.

On Tuesday, Netflix announced a $5 billion, 10-year deal to stream World Wrestling Entertainment’s (WWE’s) Raw live on Netflix. The company was able to win a deal out from long-time Raw network USA, which is owned by NBCUniversal. NBCUniversal’s Peacock streaming service also has the rights to some WWE events. But Netflix’s seizure of Raw illustrates its interest in ad dollars from live sports and its pull and budget compared to aging broadcast and cable networks. Looking ahead, we expect to see Netflix consider additional live events that can appeal to advertisers.

Netflix said this week that it’s not anticipating the same amount of subscriber growth that it enjoyed in 2023 in 2024. But it does expect double-digit revenue growth. That newfound money has to come from somewhere. If Netflix can’t pull it all from new subscribers, it will force it out of existing customers through higher prices and ads.

Netflix, hungry for more growth, signals more price hikes Read More »

wireless-tvs-use-built-in-cameras,-nfc-readers-to-sell-you-stuff-you-see-on-tv

Wireless TVs use built-in cameras, NFC readers to sell you stuff you see on TV

ads, Tech, TVs / /
webcam protruding out of the Displace TV

Enlarge / A closeup of the webcam on the Displace TV announced in January.

Dislace

It’s no secret that TV makers are seriously invested in pushing ads. Using TVs for advertising goes back to 1941 when the first TV commercial aired. But as we trudge our way through the 21st century, TV vendors are becoming more involved in ensuring that their hardware is used to sell stuff and add to their own recurring revenue.

This has taken various forms, but in some cases, we’re seeing increasingly invasive strategies for turning TVs into a primary place for shopping. The latest approach catching attention comes from the startup Displace. Its upcoming TVs will use integrated webcams and NFC payment readers to make it easy for people to buy stuff they see on TV.

Displace hasn’t officially released a product yet, so skepticism about the TVs it says it will demo at CES 2024 in Las Vegas next month, as spotted by sites like Wifi Hifi, is warranted. (Displace said it would have images of the newly announced TVs to share next year). The startup specializes in wireless TVs with hot-swappable batteries that can vacuum suction-mount to a wall and zip-line slowly off said wall when sensing an unstable connection or low battery. The original “Displace TV” that Displace announced in January is supposed to ship in mid-2024. Displace has been taking preorders for those.

The two new TVs Displace is adding to its 2024 release plans, the Displace Flex and Displace Mini, are all about making watching TV shopping better.

Stop & shop: TV edition

According to Displace’s announcement, the Displace Flex (a 55-inch 4K OLED TV) and Displace Mini (a 27-inch 4K OLED TV) will use proprietary gesture technology and each TV’s integrated 4K camera to tell when a user is raising their hand. It’s unclear how accurate that will be (could the shopping experience accidentally be activated if I raised my hand to tie my hair up, for example?), but at that point, the TV is supposed to pause the content being played. Then, it uses computer vision to “analyze the screen to find products available for sale. Once they see something they want to purchase, viewers drag and drop the product into the global Displace Shopping Cart,” the announcement says.

Displace Shopping will work at any moment the TV is on, and users can buy stuff they see in commercials by using the TVs.

Displace’s December 14 announcement said:

As soon as the viewer is ready to checkout, Displace Payments makes paying as easy as bringing a user’s smartphone or watch near the TV’s built-in NFC payment reader, a fully secure process that requires no credit card info. Viewers can also pay from within the Displace app.

If the TV can’t find a specific product for sale, it will “search for similar items” without user intervention, according to Displace. The TV will show products from any available online retailers, allowing users to select where they want to make their purchase.

Displace hasn’t provided full details about how it will make money off these transactions, but when reached for comment, founder and CEO Balaji Krishnan told Ars Technica that Displace has “different business models, and one of them is to take a transaction fee,” and that Displace will share more details “later.”

Displace also sees people using Displace Payments to pay for telehealth applications and equipped the Flex and Mini with thermal cameras.

Wireless TVs use built-in cameras, NFC readers to sell you stuff you see on TV Read More »

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Marketer sparks panic with claims it uses smart devices to eavesdrop on people

ads, Policy, Tech, voice assistant / /
Couple on couch with smart speaker

We’ve all experienced it or heard about it happening: Someone has a conversation about wanting a red jacket, and then suddenly, it seems like they’re seeing ads for red jackets all over the place.

Makers of microphone-equipped electronics sometimes admit to selling voice data to third parties (advertisers). But that’s usually voice data accumulated after a user has prompted their device to start listening to them and after they’ve opted into (preferably not by default) this sort of data collection.

But a marketing company called CMG Local Solutions sparked panic recently by alluding that it has access to people’s private conversations by tapping into data gathered by the microphones on their phones, TVs, and other personal electronics, as first reported by 404 Media on Thursday. The marketing firm had said it uses these personal conversations for ad targeting.

Active Listening

CMG’s Active Listening website starts with a banner promoting an accurate but worrisome statement, “It’s true. Your devices are listening to you.”

A screenshot from CMG's Active Listening website.

Enlarge / A screenshot from CMG’s Active Listening website.

A November 28 blog post described Active Listening technology as using AI to “detect relevant conversations via smartphones, smart TVs, and other devices.” As such, CMG claimed that it knows “when and what to tune into.”

The blog also shamelessly highlighted advertisers’ desire to hear every single whisper made that could help them target campaigns:

This is a world where no pre-purchase murmurs go unanalyzed, and the whispers of consumers become a tool for you to target, retarget, and conquer your local market.

The marketing company didn’t thoroughly detail how it backs its claims. An archived version of the Active Listening site provided a vague breakdown of how Active Listening purportedly works.

The website previously pointed to CMG uploading past client data into its platform to make “buyer personas.” Then, the company would identify relevant keywords for the type of person a CMG customer would want to target. CMG also mentioned placing a tracking pixel on its customers’ sites before entering the Listening Stage, which was only described as: “Active Listening begins and is analyzed via AI to detect pertinent conversations via smartphones, smart TVs, and other devices.”

The archived version of the page discussed an AI-based analysis of the data and generating an “encrypted evergreen audience list” used to re-target ads on various platforms, including streaming TV and audio, display ads, paid social media, YouTube, Google, and Bing Search.

That explanation doesn’t appear to be on the Active Listening page anymore, but CMG still says it can target people who are actively saying things like, “A minivan would be perfect for us” or “This AC is on it’s [sic] last leg!” in conversations.

But are they actively listening?

In a statement emailed to Ars Technica, Cox Media Group said that its advertising tools include “third-party vendor products powered by data sets sourced from users by various social media and other applications then packaged and resold to data servicers.” The statement continues:

Advertising data based on voice and other data is collected by these platforms and devices under the terms and conditions provided by those apps and accepted by their users, and can then be sold to third-party companies and converted into anonymized information for advertisers. This anonymized data then is resold by numerous advertising companies.

The company added that it does not “listen to any conversations or have access to anything beyond a third-party aggregated, anonymized and fully encrypted data set that can be used for ad placement” and “regret[s] any confusion.”

Before Cox Media Group sent its statement, though, CMG’s claims of collecting data on “casual conversations in real-time,” as its blog stated, were questionable. CMG never explained how our devices would somehow be able to garner the computing and networking power necessary to record and send every conversation spoken within the device’s range in “real-time,” unbeknownst to the device’s owner. The firm also never explained how it acquired the type of access that requires law enforcement to obtain a warrant. This is despite CMG’s blog claiming that with Active Listening, advertisers would be able to know “the second someone in your area is concerned about mold in their closet,” for example.

CMG’s November blog post pointed to an unnamed technology partner that can “aggregate and analyze voice data during pre-purchase conversations,” as well as a “growing ability to access microphone data on devices.”

Marketer sparks panic with claims it uses smart devices to eavesdrop on people Read More »