May You Live In Interesting Times, Ad-Supported Streaming Need Some More Love

1. May You Live In Interesting Times

Sometime in 2023, the New York Times, in their ultimate wisdom, referred to Paramount’s hit show Yellowstone as a “red state favorite.”

I remember it struck me at the time because it was such a New York Times way to frame things, as if the show’s popularity, by dint of it not being on their radar, somehow made it “less than” (“red state” was clearly not meant to be a compliment.)

It was odder still because there is nothing particularly “red state” about Yellowstone, which, at its heart, is a family drama set in the current-day West. Yes, there’s some violence, an emphasis on family loyalty and a sense of rugged masculinity of the sort traditionally embodied by tough frontiersmen, but nothing  we haven’t seen before. That, and the show has actually been commended for slamming unchecked capitalism and for paying much attention to the Native American perspective.

At around the same time as they were dissing Yellowstone, the Times became obsessed with Succession, another family drama, albeit one that was far more cynical in its take on family, power, morality and masculinity. 

They were two very different types of shows, aimed at two very different audiences, but they highlighted two very different threads in popular entertainment: the sweeping soap opera-esque saga with heroes and villains that allowed viewers to lose themselves in a larger-than-life story, and the incisive social critique with generally unlikeable and morally ambiguous character that allowed viewers to feel morally superior to the rich and famous.

Neither of which can be categorized as Red or Blue.

I bring this up because as the US—and most of the West, for that matter—grows more and more divided, and as any vestiges of a more centralized media ecosystem fall by the wayside, it will be very tempting to engage in this type of “my side versus your side” type programming, of looking to create shows or even entire media outlets that are pitched to either Team Red or Team Blue.

And the danger is that once that happens, shows, streaming services and even TV commercials are all going to be forced into boxes they had no intention of climbing into.

Why It Matters

We are, as the Chinese curse goes, living in interesting times. Polarization has reached great heights. And the television industry is in the crosshairs. 

Everything is politicized. Read a review of a new luxury beach resort and, depending on the outlet, the comments are likely to either be about how it’s lucky that the hotel doesn’t practice DEI in assigning pool chairs, or complaints about how its mere existence is an insufferable example of white settler colonialist greed.

Given TV’s higher profile, everything the industry does is going to be a major minefield for the next while. Shows will be held under a microscope to try and find evidence they are pushing some sort of agenda. Even if that agenda is only to get people to laugh or cry.

News, at some level, will be easier. Everyone already assumes MSNBC is Team Blue and Newmax is Team Red. 

Ted Lasso is not going to be as easy to grok.

What You Need To Do About It

The main thing you need to do about it is ignore it. Pretend it does not exist. Keep doing the things you have been doing and don’t tie yourself up in knots trying to please everyone because you’ll only wind up pleasing no one.

That said, you do need to monitor what is being said about you so it does not get out of control. Make sure you are not purposely antagonizing anyone. Acknowledge that different people like different types of programming. And do not get into fights with trolls.

Remember too, there is much in this industry that is beyond your controls. That at some point someone associated with something you did will have turned out to have something dumb or hateful or both many years ago. And that the Madame Lafarges with their clacking knitting needles will not let it go.

So develop the hide of a rhinoceros. You’ll need it.

2. Ad-Supported Streaming Need Some More Love

You may have seen some slides, possibly on my LinkedIn, comparing the number of ad minutes viewed on streaming to the number viewed on linear and been surprised by the massive lead linear seems to have.

That’s less a reflection of ad spend however (though that number does remain troubling) and more a reflection of how much streaming content still remains ad-free.

The numbers are shifting—according to a recentish LG Ad Solutions study, 7 in 10 CTV users prefer streaming free video content with ads instead of a paid subscription without ads.

But preference does not always equal reality, and the fact is that other than Amazon, none of the big streaming services have converted anywhere close to a majority of their viewers to ad-supported.

Which is yet another reason why the dollars seem to be shifting so slowly.

Why It Matters

When I talk to people on the agency side, the consensus seems to be that streaming services need to have around 60% of their viewers on some sort of ad supported platform in order for the service to be very attractive to advertisers. 

Less than that and you’re not hitting enough people and the assumption is that the people you are hitting are somehow different from the overall subscriber base and thus less desirable.

It’s going to be a struggle to get to that 60% number too.

Amazon was able to do it by magically converting all its subscribers to an ad-supported plan last year, with anyone wanting to go ad free needing to figure out how to pay the extra $3/month for the privilege. 

Not many people did (Amazon does not release such numbers but most estimates I’ve seen net out at around 30% moving to ad-fee and I suspect that’s generous.)

That’s less about the desirability of ad-free and more about the fact that most people subscribe to Amazon for the free two-day delivery, not the video. That, or they use Amazon to watch football, which is, by nature, ad-supported.

But for everyone else, the pull towards ad-supported is not that strong.

There are multiple reasons for that, starting with why people subscribe, which is often to watch a particular show. And if the price difference between ad-free and ad-supported is only a few dollars a month, and the plan is to only subscribe to the service for a few months, the choice is not a difficult one.

What You Need To Do About It

If you are an SVOD service there are three things you need to do to boost your ad-supported inventory.

1. Launch a FAST Service. You are going to need to do this if you want any sort of market share in much of the Global South anyway, places where only a small percentage of the population can pay for a subscription streaming service of any sort. In the West you can use it to promote your library as well as older seasons of your current shows in an attempt to lure people to subscribe to see the current season. Just make sure you collect email addresses.

2. Raise Prices On Your Ad-Free Service. You want to create more of a gap between ad-supported and ad-free, so only the hardcore fans and the very affluent ones choose ad-free. If nothing else, you’ll make more money in subscription revenue. But basically, you want to give your “only signing up to see this 8-episode show” viewers a reason to go ad-supported and “it’s $15 a month less” is a big one.

3. Only Bundle The Ad-Supported Version. People who are looking to save money on a bundle of subscription apps aren’t going to be too upset to find out that they’re only getting the ad-supported version. And you get to lock them in for a year, something your ad sales team is really going to appreciate.

Even if they’re too busy to tell you.

Just make sure they keep the ad loads down.