Streaming Choices Thrill Customers, Vex Content Creators

Call it Streaming Chaos. 

Consumers seemingly have more streaming video content choices than there are stars in the universe. The chaos comes in when content creators try to figure out how to monetize all that video.

Because while digital technology seems to have upended much of mankind, the reality remains that paying actors to do dramatic or funny things on camera has never been a guarantee of profits. More to the point, it’s probably never been truer. 

What undoubtedly has changed is that digital has given people more ways to complain about things and launch their thoughts into the echo chamber (think social media). This came to mind as I was reading a Cord Cutters News story about Netflix experimenting with video promos for its content in between episodes of other content. 

This is not the first time Netflix has tested pre-roll “trailers,” as the company likes to call them, to assist viewers with much-needed content discovery. Some horrified critics instantly took to platforms like Reddit to attack the trailers as interruptive ads. When I read a story on, say, the Wall Street Journal’s website, I get pop-ups in the lower right-hand corner suggesting another WSJ story, but I don’t consider them ads. Unlike in Netflix’s case, they don’t occupy the entire screen and require me to watch or skip them. So perhaps proportion is the main issue of concern with Netflix’s latest experiments, not semantics about what constitutes advertising.

Nonetheless, the bigger question to me is when—not if—Netflix decides to sell ads in its video content. I think it’s inevitable. Which relates to the issue of whether Netflix is profitable or ever can be. If you venture down the deep, dark rabbit hole that is financial accounting, you learn that “profit” tends to be in the eye of the beholder. To make a very complicated story short, some people don’t believe Netflix properly accounts for the cost of its content—original and licensed. This fuels various news reports, including a story from Seeking Alpha featuring the scary headline Why Netflix May Never Actually Turn A Real Profit. I would simply point out that viewers aren’t required to purchase Netflix’s stock. That’s for investors (aka speculators). And when those camps encounter a story like the one from Seeking Alpha, maybe they should take note that the prospect of Netflix generating future revenue by selling ads isn’t mentioned once. 

One could easily argue there is way too much content on Netflix, some of it the average person would watch only if tied to a couch against their will, eyes taped wide open. (To be fair, the same can be said of other providers.) However, dramas like Ozark, with Season 2 set to premiere on August 31, are enough to get some people to ignore the useless content and believe their $14.13 monthly subscription for five logins they can share with family and friends is still a good deal. And that’s the main point of Netflix’s business model right now: throw enough content up there to keep people signed up for long periods of time.

Disney will be entering this fray late next year with the launch of its direct-to-consumer streaming service. If the company’s acquisition of 21st Century Fox Inc.’s entertainment assets is approved, Disney will find itself leading no fewer than three digital services, including ESPN Plus and Hulu, of which it would become majority owner under the Fox deal. At the very least, it could take Disney quite some time to catch up with the likes of Netflix, in part because lots of Disney content is still licensed to, that’s right, Netflix.

With regard to Disney’s new direct-to-consumer offering, many people (particularly those sans offspring) can get through their day without consuming any content from Disney—or Fox, for that matter. But if you’re a theme park aficionado, the Disney package might just prompt you to cull your skinny bundle choices because of special deals for its parks and resorts that are expected to be included with the streaming service package.

Finally, don’t rule out ads on Amazon Prime Video. I’m not the only person who believes this is also inevitable. A recent story from TechCrunch centered on a job posting by Amazon in the U.K. that, to some people, presages the company rolling out ads in varying types of video programming. Among other things, note the way Amazon changed the job title multiple times after it became public knowledge.

Time will tell. 

In the meantime, if you like video, lean back and enjoy the chaos.