The TV industry is certainly skilled when it comes to ignoring the will of the customer. You’ll recall that as the cord cutting and ratings free fall began, the sector’s very first impulse was to double down on a lot of bad ideas, from mindlessly raising rates, to editing down programs or speeding them up to shove more ads into each viewing hour. And as new innovations like ad skipping DVR technology emerged, the industry’s very first impulse was to first sue companies in a bid to ban the tech, then “innovate” by charging users more if they did want to skip ads.
This week, both AT&T and Hulu (which AT&T now owns a chunk of via its Time Warner merger) unveiled their latest “innovation” in delivering ads that users don’t want: ads that run when you press pause and leave the room. According to AT&T, the tech should emerge sometime next year for its DirecTV and IPTV (formerly branded U-Verse) TV customers:
“AT&T also has hopes to use the pause to lend new momentum to TV advertising. The company, which owns DirecTV and U-verse, expects to launch technology next year that puts a full-motion video on a screen when a user decides to take a respite. “We know you’re going to capture 100% viewability when they pause and unpause,” says Matt Van Houten, vice president of product at Xandr Media, AT&T’s advertising division. “There’s a lot of value in that experience.”
Said “value” will certainly be in the eye of the beholder. Consumers that have made it clear they don’t want to pay an arm and a leg for traditional TV and watch ads aren’t going to be particularly thrilled to engage in another, entirely new layer of ads. And the “value” of layering more ads when users press pause and (usually) leave the room certainly isn’t going to be any kind of panacea for the problems that plague the sector (high prices, too many ads, terrible customer service, bloated & inflexible pay TV lineups, and sagging ratings).
For its part, AT&T makes the case that you’ll need some additional advertising in streaming because low subscription prices aren’t enough to pay for content development in the streaming era:
“At a September conference held for advertisers, AT&T executives made the case that even new forms of video entertainment – including streaming – require ad support. “If we are to continue this pace of developing content of this quality in these volumes, then we need advertising to pay for some of the content,”said Brian Lesser, chief executive of the company’s Xandr unit, while speaking to reporters at the event. “I don’t believe – nor does anybody on the team believe – that subscription video on demand services could possibly pay for all the content being developed” without relying on money from advertising.”
While that might be true, it’s worth noting that AT&T’s not trialing this technology on its streaming platforms (like DirecTV Now), it’s implementing it on its traditional IPTV and satellite TV services, which usually cost consumers (on average) upwards of $100+ per month. Forcing additional advertising on customers already annoyed by high prices isn’t the path to winning back frustrated customers. Meanwhile, AT&T has no problem raising subscription rates on streaming anyway; the company just got done implementing a streaming price hike before the ink on its last merger was even dry, and is already hinting at another round of hikes.
When you face real competition (something that’s a little alien to AT&T), you don’t get to choose when you compete on price and features. That’s why some wings of the cable and broadcast sector have finally started actually lowering the ad load in a bid to keep people from switching to streaming alternatives to heading to piracy. And while it’s true the sector needs to innovate around advertising, hitting already frustrated users with even more ads (when they’re probably not even in the room) doesn’t seem like the best path forward.