Streaming Services With Ads Are the New 'Cable 2.0'

Amazon is about to start putting ads in its Prime Video shows, which makes us wonder, what's the point of streaming services any more?

Prime Video isn't the first paid streaming service to insert ads into its shows. Netflix has also added ad-supported tiers and most streaming services are increasing their monthly fees. This could have some major effects on how we watch, aside from just making it more expensive. The FCC could end up classifying Prime, Netflix, Disney+, etc., as cable companies. And those advertisers could have a chilling effect on creativity, making streamed TV as bland and safe as network TV. 

"I think we're seeing most of the streaming services hit a certain point in their life cycle where they're a little more interested in balancing the books. Some services—like Apple TV, for example—might not be there yet, but I think they'll get there. Even though many of them have been raising prices for years, I think it's just been harder for these companies to make a profit than they anticipated. Clearly, streaming companies figure that ads are their best bet for bridging the gap," Stephen Lovely, managing editor of CordCutting.com, told Lifewire via email. 

You'll Have to Pay More to Stay Ad-Free

We've gotten used to the model of paying for something to make the ads go away, so the idea of paying and seeing ads is pretty annoying. But it's kind of always been that way. You might pay for cable TV, but you'll still see ads during movies and shows. 

So why are streaming companies doing this now? Money, obviously, but why not just jack up the subscription prices? Because advertisers are willing to pay way more than you would ever consider. Right now, Netflix still has ad-free tiers, and Amazon will let you watch shows without ads if you pay them an extra $2.99 a month. This is significant because up until now, Prime Video has been included in a Prime subscription, a kind of 'free' sweetener add-on for subscribers. 

Creating TV shows and movies and operating a streaming service is expensive. We have been enjoying a golden age of amazing episodic TV shows with no ads, and companies like Disney and Apple have been throwing money at creators in order to build out their offerings. But perhaps that golden age is now coming to an end, as tech companies no longer want to eat the huge costs just to grow a subscriber base. 

And that could have some rather drastic side effects.

End of an (Ad-Free) Era

With the addition of ads and ever-increasing prices, internet streaming is losing many of the benefits it has had over cable. And in fact, some—including the FCC, as we shall see in a moment—think it is just cable all over again. 

"It's clear we are headed in the direction of 'Cable 2.0', and I believe the days of a la carte subscriptions—only the content we want, no ads, and available everywhere—are coming to an end," Dan Goman, CEO and founder of Ateliere Creative Technologies, a company that supports digital streaming platforms, told Lifewire via email. 

There are two big advantages—apart from the lack of ads— to internet-streaming services versus regular cable. One is that you can go a la carte, choosing only the subscription services you want to pay for, rather than having to subscribe to a bundle that includes a bunch of junky channels you don't want. 

"In its current state, accessing content via a streaming service, even with ads, is still better than cable for the primary reason that you don't have to subscribe to a bloated cable bundle to access the few pieces of content that you are looking for," says Goman. 

The other advantage is that the streaming companies have been largely free to do what they want. The FCC closely controls cable, whereas internet TV is not—yet. The FCC may end up regulating them just like cable. But even worse might be the stifling effect of advertisers, which can wield substantial power over the subject matter of TV shows just by the threat of withdrawal of ad dollars. Maybe some companies will refuse to place ads in shows with non-straight characters, or that cover abortion, and so on. 

One reaction from viewers has been to go back to just downloading the shows from alternate sources, and piracy is on the rise again. But that won't help if the quality of shows drops. 

Hopefully, though, some streamers will refrain from ads and differentiate themselves on quality, just like HBO did during the cable era. The most likely candidate for this might be Apple, which doesn't put ads on its media platforms and has more than enough money to keep making great TV shows.