Per The Trade Desk, Ventura’s other top “benefits” will include a “cleaner supply chain for streaming TV advertising, minimizing supply chain hops and costs—ensuring maximum ROI for every advertising dollar and optimized yield for publishers” and improved ad targeting.
TVs sold at a loss in order to bolster ad businesses
The Trade Desk plans to sell Ventura to TV manufacturers and distributors, plus other types of companies, like airlines, hotel chains, and “gaming companies,” Axios reported.
The ad tech firm says it isn’t looking to make money off of the OS directly and doesn’t plan to make hardware.
Instead, Ventura is supposed to benefit The Trade Desk by helping its advertiser customers reach more people. Differing from how TV owners traditionally view TV software’s purpose, Ventura will prioritize the ability to show TV owners the most appealing type of ads. Green will consider Ventura a success “if it drives more pricing transparency and stronger measurement for the CTV advertising ecosystem writ large,” per Axios.
Ventura has reportedly garnered interest from Sonos already, CEO Patrick Spence told Axios. Sonos is rumored to be developing a streaming set-top box. The audio company’s serious and public consideration of something like Ventura hints at the type of business approach it may take with streaming hardware.
The Trade Desk’s interest in creating a TV OS centered on being helpful to advertisers indicates how important ads have become to TVs and/or TV software companies. Some, like Vizio and Roku, have embraced this shift so much that they’re selling TVs “at somewhere between -3 and -7 percent margin” in a scramble to attract users, Paul Gray, Omdia’s research director of consumer electronics and devices, said at a CTV industry conference earlier this month, per Broadband TV News. Then there’s Telly, a startup that has given TVs away for free so it can sell and track ads. (Telly TVs also have a secondary screen that can show ads when the TV is off.)
As companies continue to leverage TV software to sell ads and gather user data, TV owners will likely continue seeing fewer options for an ad-free TV viewing experience.
Amazon is shutting down Freevee, its free ad-supported streaming television (FAST) service, as it heightens focus on selling ads on its Prime Video subscription service.
Amazon, which has owned IMDb since 1998, launched Freevee as IMDb Freedive in 2019. The service let people watch movies and shows, including Freevee originals, on demand without a subscription fee. Amazon’s streaming offering was also previously known as IMDb TV and rebranded to Amazon Freevee in 2022.
According to a report from Deadline this week, Freevee is being “phased out over the coming weeks,” but a firm closing date hasn’t been shared publicly.
Explaining the move to Deadline, an Amazon spokesperson said:
To deliver a simpler viewing experience for customers, we have decided to phase out Freevee branding. There will be no change to the content available for Prime members, and a vast offering of free streaming content will still be accessible for non-Prime members, including select Originals from Amazon MGM Studios, a variety of licensed movies and series, and a broad library of FAST Channels – all available on Prime Video.
The shutdown also means that producers can no longer pitch shows to Freevee as Freevee originals, and “any pending deals for such projects have been cancelled,” Deadline reported.
Freevee shows still available for free
Freevee original shows include Jury Duty, with James Marsden, Judy Justice, with Judge Judy Sheindlin, and Bosch: Legacy, a continuation of the Prime Video original series Bosch. The Freevee originals are expected to be available to watch on Prime Video after Freevee closes. People won’t need a Prime Video or Prime subscription in order to watch these shows. As of this writing, I was also able to play some Freevee original movies without logging in to a Prime Video or Prime account. Prime Video has also made some Prime Video originals, like The Lord of the Rings: The Rings of Power, available under a “Freevee” section in Prime Video where people can watch for free if they log in to an Amazon (Prime Video or Prime subscriptions not required) account. Before this week’s announcement, Prime Video and Freevee were already sharing some content.
At the same time, the rest of WBD is in a period of duress as the cable and movie industries struggle. Films like Beetlejuice Beetlejuice failed to reach the same success as last year’s Barbie, sending WBD studios’ revenue down 17 percent and its theatrical revenue down 40 percent. As WBD CEO David Zaslav put it:
Inconsistency also remains an issue at our Motion Picture Studio, as reinforced recently by the disappointing results of Joker 2.
Some things that helped buoy WBD’s legacy businesses won’t be around the next time WBD execs speak to investors. This includes revenue from distributing the Olympics in Europe and gains from the Hollywood writers’ and actors’ strikes ending. With WBD’s networks business also understandably down, WBD’s overall revenue decreased 3 percent YoY. It’s natural for the company to lean more on its strongest leg (streaming) to help support the others.
WBD wants more streaming M&As
Today, Zaslav reiterated earlier stated beliefs that the burgeoning streaming industry needs more mergers and acquisitions activity to maintain profitability. He discussed complications for users, who have to consider various services’ pricing and are “Googling where a show is, or where a sport is, and you’re going from one to another, and there’s so many.” He added:
It’s not sustainable. And there probably should have been more meaningful consolidation… You’re starting to see fairly large players saying, ‘Hey, maybe I should be a part of you. Or maybe I should be a part of somebody else.’
Zaslav said that it’s too early to know if Donald Trump’s presidency will boost these interests. But he suggested that the incoming administration “may offer a pace of change and an opportunity for consolidation that may be quite different [and] that would provide a real positive and accelerated impact on this industry that’s needed.”
It’s also too early to know if streaming consolidation would help subscribers fed up with rising prices and growing ad loads. But for now, that’s about all we can bet on from streaming services like Max.
Similarly, the report’s authors describe concerns that the CTV industry’s extensive data collection and tracking could potentially have a political impact. It asserts that political candidates could use such data to run “covert personalized campaigns” leveraging information on things like political orientations and “emotional states”:
With no transparency or oversight, these practices could unleash millions of personalized, manipulative and highly targeted political ads, spread disinformation, and further exacerbate the political polarization that threatens a healthy democratic culture in the US.
“Potential discriminatory impacts”
The CDD’s report claims that Black, Hispanic, and Asian-Americans in the US are being “singled out by marketers as highly lucrative targets,” due to fast adoption of new digital media services and brand loyalty. Black and Hispanic communities are key advertising targets for FAST channels, per the report. Chester told Ars:
There are major potential discriminatory impacts from CTV’s harvesting of data from communities of color.
He pointed to “growing widespread racial and ethnic data” collection for ad targeting and marketing.
“We believe this is sensitive information that should not be applied to the data profiles used for targeting on CTV and across other platforms. … Its use in political advertising on CTV will enable widespread disinformation and voter suppression campaigns targeting these communities,” Chester said.
Regulation
In a letter sent to the FTC, FCC, California attorney general, and CPPA , the CDD asked for an investigation into the US’ CTV industry, “including on antitrust, consumer protection, and privacy grounds.” The CDD emphasized the challenges that streamers—including those who pay for ad-free streaming—face in protecting their data from advertisers.
“Connected television has taken root and grown as an unregulated medium in the United States, along with the other platforms, devices, and applications that are part of the massive internet industry,” the report says.
The group asks for the FTC and FCC to investigate CTV practices and consider building on current legislation, like the 1988 Video Privacy Protection Act. They also request that antitrust regulators delve deeply into the business practices of CTV players like Amazon, Comcast, and Disney to help build “competition and diversity in the digital and connected TV marketplace.”
PlayStation 5 owners are reporting advertisements on the device’s home screen. Frustratingly, the ads seem to be rather difficult to disable, and some are also outdated ads and/or confusing content.
The ads, visible on users’ home screens when they hover over a game title, can only be removed if you disconnect from the Internet, IGN reported today. However, that would block a lot of the console’s functionality. The PS5 dashboard previously had ads but not on the home screen.
Before this recent development, people would see game art if they hovered over a game icon on the PS5’s home screen. Now, doing so reportedly brings up dated advertisements. For example, IGN reported seeing an ad for Spider-Man: Across the Spider-Verse “coming soon exclusively in cinemas” when hovering over the Marvel’s Spider-Man: Miles Morales game. Webheads will of course recall that the Spider-Verse movie came out in June 2023.
Similarly, going to NBA 2K25 reportedly shows an ad for gaining early access. But the game came out early this month.
Per IGN, it seems that the console is “pulling in the latest news for each game, whether it be a YouTube video, patch notes, or even the announcement of a different game entirely.” That means that not all games are showing advertisements. Instead, some show an image for a YouTube video about the game or a note about patch notes or updates for the game.
There also seem to be some mix-ups, with MP1st reporting seeing an ad for the LEGO Horizon Adventures game when hovering over the icon for Horizon Zero Dawn. The publication wrote: “The ad also make[s it] confusing a bit, as… it looks like you’re playing LEGO Horizon Adventures and not the actual Horizon game we’re on.”
Some games, like Astro Bot, however, don’t seem to be affected by the changes, per IGN.
Annoyed and confused
Gamers noticing the change have taken to the web to share their annoyance, disappointment, and, at times, confusion about the content suddenly forced into the PS5’s home screen.
“As someone playing through the Spiderman series now, this confused the hell out of me,” Crack_an_ag said via Reddit.
Others are urging Sony to either remove the feature or fix it so that it can be helpful, while others argue that the feature couldn’t be helpful regardless.
“Forcing every single game to make its latest news story its dashboard art is SO stupid as no one game uses the news feature consistently,” Reddit user jackcos wrote.
Sam88FPS, meanwhile, noted that ads drove them from Xbox to PlayStation:
One of the main reasons I moved away from Xbox was the fact they started to build the Xbox UI around ads and pushing [Game Pass]. Hopefully Sony listens more because Xbox absolutely refused to, in fact, they even added full screen startup ads lmao.
It’s unclear what exactly prompted this change. Some suspect it’s related to firmware update 24.06-10.00.00. But that update came out on September 12, and, as IGN noted, its patch notes don’t say anything about this. Considering the obvious problems and mix of content being populated, it’s possible that Sony is working out some kinks and that eventually the content shown on users’ home screens will become more relevant or consistent. The change has also come a few days after a developer claimed that Sony lost $400 million after pulling the Concord online game after just two weeks, prompting digs at Sony and unconfirmed theories that Sony is trying to make up for financial losses with ads.
Ars Technica has reached out to Sony about why it decided to add non-removable ads to the PS5 home screen and about the outdated and otherwise perplexing content being displayed. We’ll let you know if we hear back.
Last month, Ars Technica went on a deep dive into the rapid growth of ads in TV software. Less than three weeks later, LG announced that it was adding advertisements to its TVs’ screensavers. The move embodies how ads are a growing and virtually inescapable part of the TV-viewing experience—even when you’re not watching anything.
As you might have expected, LG didn’t make a big, splashy announcement to consumers or LG TV owners about this new ad format. Instead, and ostensibly strategically, the September 5 announcement was made to advertisers. LG appears to know that screensaver ads aren’t a feature that excites users. Still, it and many other TV makers are happy to shove ads into the software of already-purchased devices.
LG TV owners may have already spotted the ads or learned about them via FlatpanelsHD, which today reported seeing a full-screen ad on the screensaver for LG’s latest flagship TV, the G4. “The ad appeared before the conventional screensaver kicks in,” per the website, “and was localized to the region the TV was set to.” (You can see images that FlatpanelsHD provided of the ads here, here, and here.) The reviewer reported seeing an ad for LG’s free ad-supported streaming channel, LG Channels, as well as third-party ads.
LG has put these ads on by default, according to FlatpanelsHD, but you can disable them in the TVs’ settings. Still, the introduction of ads during a screensaver, shown during a pause in TV viewing that some TVs use as an opportunity to show art or personal photos that amplify the space, illustrates the high priority that ad dollars and tracking have among today’s TVs—even new top-of-the-line ones.
According to LG’s ads arm, LG AD Solutions, the screensaver ads activate “across the home screen, LG Channels, and Content Store on LG smart TVs.” The point is to capitalize “on idle screen time, turning what may be perceived as a period of downtime into a valuable engagement opportunity.” LG AD Solutions claims that it has commissioned testing showing that screensaver ads drive “on average a 2.5 times higher lift in brand awareness.”
In a statement, LG AD Solutions CTO Dave Rudnick seemed to acknowledge that people whose TVs are showing screensavers are often trying to do something other than look at adverts.
“In the past, a screensaver ad might have indicated that viewers had left the room, but today’s viewing habits are markedly different,” he said. “Now, 93 percent of viewers multitask while watching TV, engaging in activities like messaging, shopping, browsing social media, or playing games on their phones.”
TV advertising: The next generation
The addition of screensaver ads that users can disable may sound like a comparatively smaller disruption as far as TV operating system (OS) ads go. But the incorporation of new ad formats into TV OSes’ various nooks and crannies is a slippery slope. Some TV brands are even centered more on ads than selling hardware. Unfortunately, it’s up to OS operators and TV OEMs to decide where the line is, including for already-purchased TVs. User and advertiser interests don’t always align, making TV streaming platforms without third-party ads, such as Apple TV, increasingly scarce gems.
LG has been expanding its business for selling and tracking ads shown on LG TVs. It has a partnership with Nielsen that sends automatic content-recognition data gathered from LG TVs to Nielsen, for example. Additionally, LG has boasted of plans to evolve from a hardware business into a “media and entertainment platform,” which includes selling ads. The South Korean company has also expressed strong interest in shopable TV ads.
For its part, LG’s growing ad interests have led it to launch a new LG Ad Solutions division this month that’s focused on developing new ways to show ads to and track smart TV users. In a statement, Rudnick said Innovation Labs is seeking to “push the boundaries” of smart-TV advertising and drive “next-generation advertising,” including interactive ads, on smart TVs.
LG is adapting to a changing market
LG claims to have done its homework before deciding to inject ads into its TVs’ screensavers. LG Ad Solutions-commissioned research, which was reportedly conducted and measured by Lucid, a consumer market research firm, found that screensaver ads increase brand awareness, especially among adults 45 and up and women with a household income greater than $80,000 (assumedly annually).
LG’s ads push comes as it’s challenged to continue finding revenue and growth from its TV business while TVs get more advanced and reliable and are able to get new features via software updates. Meanwhile, advertisers are challenged to find ways to continue reaching TV viewers in a world shifting from linear TV to streaming and web-based entertainment that’s often sold with the option of being commercial-free. Although lower-priced TVs, like those running Roku OS, may have a reputation for more ads, they’re also doing well in the market.
Market conditions and changing TV users’ habits are forcing LG to adapt the way it makes money from TVs. Unfortunately for those adverse to ads, that means pushing more commercials and finding better ways to track viewers.
Enlarge/ The state of New York says that this guy is the “assman,” not me. Show him the butt ads!
Seinfeld
According to my research, everyone has a butt.
But that doesn’t mean, when I’m imbibing my morning cuppa and reading up on the recent presidential debate, that I want to see an ad showing an illustrated derrière with a bar of soap clenched firmly between its two ripe cheeks.
Yet there it was, a riotous rump residing right in the middle of a New York Times article this week, causing me to reflect on just how far the Gray Lady has stooped to pick up those ad dollars lying in the gutter.
It’s not the first time this sort of thing has sullied the “paper of record.” In 2022, I was forward-thinking enough to grab a screenshot of the Times helping to sell me some sort of wipe with the tagline: “When your butt doesn’t smell like butt.” It was also marketed as deodorant for “your pits and lady bits.”
Enlarge/ Would Don Draper have written “smell like butt” on one of his ads?
Not having any “lady bits” to deodorize, this was not particularly compelling, but the true high point of ass-related irrelevancy at the Times came when I was served an ad featuring a mournful-looking dog who pointed the business end of his hindquarters directly at the camera. “It’s time to leave your dog’s anal gland problems behind,” I was told.
I have never owned a dog, nor—to my children’s continuing dissatisfaction—ever will. It was therefore left to Ars Technica’s Managing Editor Eric Bangeman, who is a noted canine lover and a true “friend to all creatures, even rats,” to explain to me just what this baffling advertisement meant.
Enlarge/ Now I really don’t want a pet in the house.
Once you start looking for these oddly direct ads in self-consciously “classy” media outlets, you see them everywhere, including in The Atlantic, where a bidet ad once promised that it would make my “butt crack smile.”
(Perhaps this last ad can be blamed on my boss, who has spoken in such glowing terms about high-end Japanese toilet technology that I Googled it—probably marking myself as some kind of “ass man” for life.)
Whatever the reason for seeing one of these ads, all of them looked cheap, and none of them felt relevant. I have nothing against the noble bidet, but having “holy sthis thing’s a gamechanger!!!” appear in the middle of my screen while pondering some chinstroker of an article was not exactly why I had visited The Atlantic.
Enlarge/ The game, it has been changed. By this stream of water. Shooting at your butt.
The great irony of online advertising these days is that it’s often claimed to be “targeted,” mining our personal and demographic information to serve us the ads that we allegedly want to see. Wouldn’t I prefer to view ads “relevant to my interests”? Maybe. But I can say with confidence that after two decades of being “extremely online” for work, the number of ads I have voluntarily and enthusiastically clicked upon must number in the low double digits.
Instead, the engines powering these ad networks continue to bombard me with two kinds of ads: 1) those that are wholly irrelevant to my interests and 2) those that are relevant to my interests because they display the exact product I once looked at in some online store. Ad targeting companies may “know a lot about me,” but they don’t know me in any truly useful way.
They don’t know, for instance, why I looked at some product online, or if I already made a decision not to buy it (or to buy it elsewhere), or if I just wanted to better understand my boss’s love of Japanese bidets. They don’t know whether I have (or want) a dog. And they (clearly) don’t know that I would be repulsed by an edible product shaped like a human ear and featuring both bite marks and Mike Tyson’s name.
(Fortunately, you can completely opt out of ads at some sites, including Ars Technica, by subscribing for a few bucks a month—and contributing directly to our bottom line.)
The TV business isn’t just about selling TVs anymore. Companies are increasingly seeing viewers, not TV sets, as their most lucrative asset.
Over the past few years, TV makers have seen rising financial success from TV operating systems that can show viewers ads and analyze their responses. Rather than selling as many TVs as possible, brands like LG, Samsung, Roku, and Vizio are increasingly, if not primarily, seeking recurring revenue from already-sold TVs via ad sales and tracking.
How did we get here? And what implications does an ad- and data-obsessed industry have for the future of TVs and the people watching them?
The value of software
Success in the TV industry used to mean selling as many TV sets as possible. But with smart TVs becoming mainstream and hardware margins falling, OEMs have sought new ways to make money. TV OS providers can access a more frequent revenue source at higher margins, which has led to a viewing experience loaded with ads. They can be served from the moment you pick up your remote, which may feature streaming service ads in the form of physical buttons.
Some TV brands already prioritize data collection and the ability to sell ads, and most are trying to boost their appeal to advertisers. Smart TV OSes have become the cash cow of the TV business, with providers generating revenue by licensing the software and through revenue sharing of in-app purchases and subscriptions.
A huge part of TV OS revenue comes from selling ads, including on the OS’s home screen and screensaver and through free, ad-supported streaming television channels. GroupM, the world’s largest media investment company, reported that smart TV ad revenue grew 20 percent from 2023 to 2024 and will grow another 20 percent to reach $46 billion next year. In September 2023, Patrick Horner, practice leader of consumer electronics at analyst Omdia, reported that “each new connected TV platform user generates around $5 per quarter in data and advertising revenue.”
Automatic content recognition (ACR) tech is at the heart of the smart TV ads business. Most TV brands say users can opt out of ACR, but we’ve already seen Vizio take advantage of the feature without user permission. ACR is also sometimes turned on by default, and the off switch is often buried in a settings menu. Including ACR on a TV at all says a lot about a TV maker’s priorities. Most users have almost nothing to gain from ACR and face privacy concerns by sharing information—sometimes in real time—about what they do with their TVs.
At this point, consumers have come to expect ads and tracking on budget TVs from names like Vizio or Roku. But the biggest companies in TV are working on turning their sets into data-prolific billboards, too.
When TVs watch you back, so do corporations
In recent years, we’ve seen companies like LG and Samsung increase their TVs’ ad capabilities as advertisers become more eager to access tracking data from TVs.
LG, for example, started sharing data gathered from its TVs with Nielsen, giving the data and market measurement firm “the largest ACR data footprint in the industry,” according to an October announcement. The deal gives Nielsen streaming and linear TV data from LG TVs and provides firms buying ads on LG TVs with “‘Always On’ streaming measurement and big data from LG Ad Solutions” via Nielsen’s ONE Ads dashboard.
LG, which recently unveiled a goal of evolving its hardware business into an ad-pushing “media and entertainment platform company,” expects there to be 300 million webOS TVs in homes by 2026. That represents a huge data-collection and recurring-revenue opportunity. In September, LG said it would invest 1 trillion KRW (about $737.7 million) through 2028 into its “webOS business,” or the business behind its smart TV OS. The company said updates will include improving webOS’s UI, AI-based recommendations, and search capabilities.
Similarly, Samsung recently updated its ACR tech to track exposure to ads viewed on its TVs via streaming services instead of just from linear TV. Samsung is also trying to make its ACR data more valuable for ad targeting, including through a deal signed in December with analytics firm Experian.
Representatives for LG and Samsung declined to comment to Ars Technica about how much of their respective company’s business is ad sales. But the deals they’ve made with data-collection firms signal big interest in turning their products into lucrative smart TVs. In this case, “smart” isn’t about Internet connectivity but rather how well the TV understands its viewer.
Reddit executives discussed plans on Tuesday for making more money from the platform, including showing ads in more places and possibly putting some content behind a paywall.
On Tuesday, Reddit shared its Q2 2024 earnings report (PDF). The company lost $10.1 million during the period, down from Q2 2023’s $41.1 million loss. Reddit has never been profitable, and during its earnings call yesterday, company heads discussed potential and slated plans for monetization.
As expected, selling ads continues to be a priority. Part of the reason Reddit was OK with most third-party Reddit apps closing was that the change was expected to drive people to Reddit’s native website and apps, where the company sells ads. In Q2, Reddit’s ad revenue grew 41 percent year over year (YoY) to $253.1 million, or 90 percent of total revenue ($281.2 million).
When asked how the platform would grow ad revenue, Reddit COO Jen Wong said it’s important that advertisers “find the outcomes they want at the volumes and price they want.” She also pointed to driving more value per ad, or the cost that advertisers pay per average 1,000 impressions. To do that, Wong pointed to putting ads in places on Reddit where there aren’t ads currently:
There are still many places on Reddit without ads today. So we’re more focused on designing ads for spaces where users are spending more time versus increasing ad load in existing spaces. So for example, 50 percent of screen views, they’re now on conversation pages—that’s an opportunity.
Wong said that in places where Reddit does show ads currently, the ad load is “light” compared to about half of its rivals.
One of the places where Redditors may see more ads is within comments, which Wong noted that Reddit is currently testing. This ad capability is only “experimental,” Wong emphasized, but Reddit sees ads in comments as a way to stand out to advertisers.
There’s also an opportunity to sell ad space within Reddit search results, according to Reddit CEO Steve Huffman, who said yesterday that “over the long term, there’s significant advertising potential there as well.” More immediately, though, Reddit is looking to improve its search capabilities and this year will test “new search result pages powered by AI to summarize and recommend content, helping users dive deeper into products, shows, games, and discover new communities on Reddit,” Huffman revealed yesterday. He said Reddit is using first- and third-party AI models to improve search aspects like speed and relevance.
The move comes as Reddit is currently blocking all search engines besides Google, OpenAI, and approved education/research instances from showing recent Reddit content in their results. Yesterday, Huffman reiterated his statement that Reddit is working with “big and small” search engines to strike deals like it already has with Google and OpenAI. But looking ahead, Reddit is focused on charging for content scraping and seems to be trying to capitalize on people’s interest in using Reddit as a filter for search results.
Paywalled content possible
The possibility of paywalls came up during the earnings call when an analyst asked Huffman about maintaining Reddit’s culture as it looks to “earn money now for people and creators on the platform.” Reddit has already launched a Contributor Program, where popular posts can make Reddit users money. It has discussed monetizing its developer platform, which is in public beta with “a few hundred active developers,” Huffman said yesterday. In response to the analyst’s question, Huffman said that based on his experience, adding new ways of using Reddit “expands” the platform but doesn’t “cannibalize existing Reddit.”
He continued:
I think the existing altruistic, free version of Reddit will continue to exist and grow and thrive just the way it has. But now we will unlock the door for new use cases, new types of subreddits that can be built that may have exclusive content or private areas—things of that nature.
Huffman’s comments suggest that paywalls could be added to new subreddits rather than existing ones. At this stage, though, it’s unclear how users may be charged to use Reddit in the future if at all.
The idea of paywalling some content comes as various online entities are trying to diversify revenue beyond often volatile ad spending. Reddit has also tried elevating free aspects of the site, such as updates to Ask Me Anything (AMA), including new features like RSVPs, which were announced Tuesday.
Reddit has angered some long-time users with recent changes—including blocking search engines, forcing personalized ads, introducing an exclusionary fee for API access, and ousting some moderators during last year’s user protests—but Reddit saw its daily active unique user count increase by 51 percent YoY in Q2 to 91.2 million.
Advance Publications, which owns Ars Technica parent Condé Nast, is the largest shareholder in Reddit.
Enlarge/ Ad-free Basic subscribers will be crane-kicked off the plan soon.
Netflix/YouTube
Netflix today confirmed suspicions that it will stop letting people pay $12 per month to stream without commercials.
The ad-free Basic plan was the cheapest way to watch Netflix without commercials. The plan limits users to 720p resolution and one device and lets people download content. Netflix stopped offering the Basic plan to new subscribers in January. In June, Netflix started booting subscribers in the UK and Canada off the plan and automatically put them onto a cheaper subscription plan with ads.
In a letter to shareholders today [PDF], Netflix confirmed publicly for the first time that it “will now start” to phase out the ad-free Basic plan in the US and France. This will make the cheapest commercial-free Netflix plan $15.49/month in the US. That Standard plan supports up to two devices, downloads, and 1080p resolution.
Netflix thinks killing the Basic plan will help it gain more subscribers who watch commercials, which, on average, generates more revenue for the company.
As expected from a streaming company these days, Netflix touted its ad tier to shareholders, noting that the $7 tier now represents “over 45 percent” of new sign-ups in areas where it’s sold. Per Netflix’s letter, ads will only be an increasingly larger part of its strategy, as Netflix aims to “achieve critical ad subscriber scale for advertisers in our ad countries in 2025, creating a strong base from which we can further increase our ad membership in 2026 and beyond.”
The news comes as streamers grapple with increasing streaming subscription costs. Netflix most recently hiked pricing in October. In January, the company suggested to shareholders that more price hikes were possible, saying that it would “occasionally ask our members to pay a little extra to reflect” platform improvements.
Not cozying up with competition
If today’s news makes you hope for a convenient streaming-only deal that lets you subscribe to Netflix and another video streaming service for cheaper, you’re out of luck. Netflix today said it’s not interested in streaming-only bundles.
Bundle deals, which combine streaming and other services for a cheaper subscription rate, have become the streaming industry’s answer to high cancellation rates among subscribers, including those who quickly cancel and resubscribe depending on what’s available to stream that month.
In its letter, Netflix noted that although cable or mobile providers or device-makers may offer deals combining Netflix and another streaming service, Netflix does not make deals that bundle it with another rival streamer, like Disney+ or Max. The company claimed that Netflix is already “a go-to destination,” which “limits the benefit to Netflix of bundling directly with other streamers.”
That means if you’re hoping to save money on your Netflix subscription, which keeps getting more expensive, the only options are to watch Netflix with commercials or get a cable-reminiscent bundle that includes a different kind of service, like Comcast or Verizon Wireless.
We know which option Netflix would like you to pick. But for frustrated streamers, finding a reasonable way to watch all the stuff you want online the way you want keeps getting harder.
Netflix added 8 million subscribers in Q2 2024, it said today. It’s still the biggest video streaming service by subscriber count at 278 million. Amazon Prime Video, which claimed “over 200 million” users in April, follows.
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.
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.”
