Whether it likes it or not, the pay TV industry is in the middle of a revolution. More people are ditching cable and satellite TV than ever before, and a new generation is growing up with Netflix and YouTube, rather than a $100-a-month cable package.
Responding to the change (and doing so without losing billions in profits) is proving to be a challenge for cable companies, but at least the industry seems to be getting one thing right. Both NBC and Fox have announced in recent weeks that they’re going to dramatically cut the number of ads on their channels, a consumer-friendly move that they’re hoping will work better with the Netflix generation.
At an industry event last week, Fox Networks Group’s ad sales director Joe Marchese announced the company plans to cut ad times down to just two minutes per hour, according to the Wall Street Journal. Broadcast ad times were around 13 minutes this year, so the cuts Fox are proposing would slash ad times by a whole order of magnitude.
“The two minutes per hour is a real target for Fox, and also our challenge for the industry,” Ed Davis, chief product officer for ad sales at Fox Networks Group, told the WSJ in an email. “Creating a sustainable model for ad-supported storytelling will require us all to move.”
Fox isn’t alone in this change, either. NBCUniversal announced last month that it “plans to cut the number of advertisements in commercial breaks by 20% and to decrease advertising time by 10% during its original prime-time programming across its broadcast and cable networks.”
Linda Yaccarino, NBCU’s ad sales guru, told Variety that the change was directly driven by the limited-ad model of streaming services. “There are more and more consumers, whether it’s from Hulu or the Netflixes or Amazons of the world, who are liberated via technology” from having to watch the sheer number of advertisements shown on traditional television, said Yaccarino. “TV networks would be crazy to believe that anything other than commercial overhaul was anything other than inevitable.”
Both companies aren’t necessarily planning on losing money by shrinking ads, however. Fox and NBCU have both suggested that limiting commercial time will make the ad slots more impactful for the audience, and thus more valuable for advertisers.
