Advertisements in a Streaming World

The entertainment streaming industry has been taking off. Many individuals are “cutting the cord” and trading in their cable channels for streaming platforms. According to a 2022 survey, 78% of U.S. households have canceled their cable and satellite TV subscriptions and joined streaming services. 

Netflix has dominated the streaming game for years, although more recently, Disney+, Amazon Prime, Apple TV+, HBO Max, Hulu, and Peacock have become Netflix’s newest competition. 

In a world of streaming, the question of what will happen to commercial advertisements is considered. Specific platforms incorporate commercials into their shows, such as Hulu and HBO Max. For example, Hulu offers a cheaper subscription with commercial breaks. Although, these advertisements aren’t like your typical cable TV commercials. Hulu offers multiple options of different ads the consumer can choose for each commercial break. Hulu also has “pause ads,” which are small advertisements on your screen when you pause your show.

Netflix CEO Reed Hastings publicly prides Hulu as being an advertising model. He claimed there is evidence that advertisements still work and are necessary. Hulu ended 2021 with 40.9 million paying subscribers, which is 5.5 million, up from the previous year. Meanwhile, Netflix has been losing subscribers for a couple of years. Flexibility drives content.

Other platforms that don’t have commercials make up for it through virtual product placements (VPP). This means that products are causally placed in content to look organic when they aren’t. An example is if someone in a scene is doing homework on their Macbook Air or an actor passes by a Pepsi bottle on display. Amazon Prime Video and Peacock both use VPP. VPP is bringing a more natural form of paid advertising.

Another streaming platform that is often overlooked is YouTube. Hulu expanded upon YouTube’s template for different advertising formats. The free version of YouTube contains “bumpers” on either side of video content. YouTube also includes users who create content promoting a particular product. Most of these users are sponsored by the brand or passionate about the company.

In a commercial-less platform, advertisements are still making their way through. In some cases, they’re even helping streaming platforms rise.

Abigail Guttman