Cable providers are still alive and well, but there’s no denying that more and more viewers are cutting the cord and turning towards streaming services like Netflix for their entertainment fix. Currently, Netflix boasts approximately 70 million subscribers, a nearly 75% increase from its subscriber base just two years ago. Looking forward, it stands to reason that the number of Netflix subscribers will only continue to rise, further exacerbating the problem of shrinking TV profits across the board.
With revenue down, networks and cable providers are anything but oblivious to the changing TV landscape. Not only are they well aware of the competitive threat posed by services like Netflix, Sling TV,
Just about a week ago, for instance, Time Warner hinted that it may start limiting the number of shows it makes available to Netflix altogether. It also hinted that it may increase the time it takes for a show to end up on Netflix after initially airing on TV.
Now, in yet another effort to quell the Netflix effect, Bloomberg recently reported that some TV networks are already cutting back on the number of aired commercials in an effort to keep viewers happy and off of their Netflix queue.
Media companies, including Time Warner Inc., 21st Century Fox Inc. and Viacom Inc., have started cutting back on commercials after years of squeezing in as many ads as possible.
The new strategy is an attempt to appeal to younger viewers, who are more accustomed to watching shows ad-free on online streaming services like Netflix Inc., and to advertisers concerned their messages are being ignored amid all the commercial clutter.
Some of the channels which have already seen their allotment of commercials slashed include truTV, Comedy Central and MTV. Without question, this is a welcome and long overdue change given that the cable TV viewing experience is littered with advertising, often to a frustrating degree. As a prime example, a report from earlier this year found that TBS has been speeding up Seinfeld episodes by 7.5% to make room for more commercials in a 30-minute time slot.
As for whether or not fewer ads will actually do anything to help bring back viewers, color me skeptical. While commercials can be frustrating at times, the incredible affordability of services like Netflix is one of the primary drivers behind cord cutting. To that end, fewer commercials might be great for current cable subscribers, but I sincerely doubt it will do much to either a) keep cable subscribers from cutting the cord or b) convince those who have already left to come back.
Financially, it will be extremely interesting to see how this plays out for the networks. While it’s too soon to tell just yet, perhaps networks, with a more limited supply of ad slots to dole out, will be able to charge advertisers more money to reach viewers. And with commercial breaks now slated to be much shorter, perhaps viewers might actually pay more attention to ads instead of zoning out or quickly fast forwarding through them with their DVR.