The customer base aside, Netflix CEO Reed Hastings has already proclaimed himself a fan of the company's foray into ad-supported video-on-demand (AVOD), calling the rollout of Netflix with ads

a good tactic, because we get to offer consumers lower prices. I didn't believe in the ad-supported tactic for us and I was wrong about that. I wish we had flipped a few years earlier on it. But we'll catch up and in a couple of years we won't remember when we started it."

Hasting is not alone in his enthusiasm for the AVOD model. Fox saw revenue for Tubi grow nearly 30 percent during the last fiscal quarter, with Tubi's revenue surpassing the advertising revenue generated by Fox Entertainment "in a meaningful way" and quarterly viewership rising to 1.3 billion hours.

Given the light ad load and the reasonable cost, I'm sticking with it. It's still a work in progress. The Roku app crashes occasionally when launching an ad, though it's getting better. In terms of platform stability, Tubi still has the advantage. The ad selection was terrible when it first launched but that's improved too.

During the halcyon days of the DVD era, the "Netflix Prize" made a big splash among statisticians and programmers. A one million dollar bounty and a fifty grand yearly incentive were awarded to independent teams who could better optimize its movie recommendation system.

Well, Netflix needs to resurrect that program and apply it to AVOD. Who knows, maybe it already has. I'd assume advertisers would pay premium rates to have their ads shown to consumers interested in their products. Isn't that why a big tech company like Microsoft got into this business in the first place?

So far, the ad placement doesn't seem any smarter than the century-old OTA approach, according to which broadcasters spray ads into the ether and hope to hit their prime demographic. At least when watching golf, it's clear that the advertisers expect a bunch of corporate types with deep pockets to be in the audience.

I did check the "Behavior advertising" box, and given two decades of my viewing history (counting all those DVDs), Netflix should know my tastes very well already. But for all the talk of big data and AI these days, I observe very little intelligence on display in online advertising beyond cookie tracking.

Related posts

Netflix with ads
Netflix with ads (content)
Netflix with ads (first impressions)

Labels: business, netflix, streaming, technology, television