As more video viewing behavior moves to on-demand streaming services, some companies will understandably get craftier about how to continue generating advertising revenue that would otherwise have come from old-school commercials. AT&T and Hulu are both apparently now considering a new type of ad that would run when you pause a video, like a TV show on DirectTV or a movie on Hulu, according to a report from Variety.
“As binge-viewing happens more and more, it’s natural they are going to want to pause,” Jeremy Helfand, Hulu’s vice president and head of advertising, told Variety in an interview, speaking about cord-cutters or those viewers who’ve only ever known streaming. According to Helfand, Hulu will introduce the so-called “pause ad” some time next year. Helfand says the pause will provide “a natural break in the storytelling experience.”
AT&T also plans to launch a similar style of ad in 2019 when a viewer pauses a video. “We know you’re going to capture 100 percent viewability when they pause and unpause,” said Matt Van Houten, vice president of product at Xandr Media, which is AT&T’s recently introduced advertising and analytics division. “There’s a lot of value in that experience.”
There is, of course, a natural adversarial relationship at play here, with strong arguments on both sides. Viewers don’t like ads, and a lack of ads on Netflix and other services became a strong, early selling point for cord-cutting and drove the adoption of on-demand, over-the-internet TV years ago. Removing ads is now considered a perk for a certain tier of streaming service, like Hulu’s No Commercials offering and YouTube Premium. And long before the advent of streaming, watching TV without ads was a core pillar of paying for DVR service or, many years ago, recording your favorite programs on VHS.
So viewers obviously have an expectation that moving to streaming should reliably translate to fewer ads, making this new pause ad idea particularly egregious. Yet at the same time, there is no easy way for these companies to continue producing high-quality shows and movies at the frequency that companies like Amazon, Hulu, and Netflix are pumping stuff out without some additional revenue streams. Netflix said last year it planned to spend $8 billion in 2018 on producing original content, and the company has started experimenting with running ads during its Netflix Originals programs. Other companies have started running ads that appear in a streaming service’s home interface, and letting production companies and studios pay to promote certain shows and movies.
Those companies could raise subscription prices, but customers might flee. That would make it even harder to produce more content, which then in turn makes it less likely new subscribers will sign up or lapsed ones will come back. It’s a vicious cycle that seems to suggest that new and more creative ways of getting people to watch ads seems like the easiest solution, even if it’s not the one most viewers will be pleased about.