Though the details are fuzzy, it appears that Apple is working on ad-free TV. According to a recent report by Jessica Lessin, a technology journalist for the Wall Street Journal, posted on her own website, Apple has been in negotiations with TV networks and cable companies. Apple apparently wants to offer a premium service that allows subscribers to skip ads for a fee. A portion of this fee would reimburse the networks and cable companies for the lost advertising revenue. Premium subscribers would access the content via a set-top Apple device.
Who wouldn’t want ad-free TV? The DVR and streaming video services such as Netflix, Hulu Plus, and Amazon Prime have made skipping commercials a reality for many viewers. They, too, charge a premium for the service. For example, most cable companies charge a monthly fee for DVR service as well as lease digital video recorders. Streaming video service providers also charge a monthly fee for the service.
However, both of these options introduce a delay in programming, albeit a short one. With a DVR, the user can watch and pause live TV, but you cannot skip a commercial in real-time if you haven’t given the DVR sufficient time to record the broadcast. Popular television shows aren’t generally made available on streaming sites until the next day – sometimes even the next season.
Apple’s appears poised to change this. It recently obtained a patent that covers swapping alternative video streaming content where commercial breaks normally appear.
What Ad-Free TV Means to Viewers
Over the years, television went from free programming from a handful of networks offering television shows with one or two sponsors to paid cable bundles with hundreds of channels. Though viewers pay their cable companies, commercials remain – and they’re a major presence. For example, according to TNS Media Intelligence, 60 minutes of prime time television programming contained about 22 minutes of commercials (roughly 36 percent) in 2008. Late night programming was even worse with over 29 minutes per hour (49 percent) containing commercial messages.
From the television audience’s perspective, ad-free TV is likely to be welcomed though not all viewers will be willing to pay for it. After all, they’re likely already paying for cable, DVR service, and possibly a streaming video account or two. Many Apple TV and other smart TV users have invested in smart TV devices with the intention of cutting their television costs.
What Ad-Free TV Means to Marketers
While it remains to be seen if Apple will introduce ad-free TV, and if consumers will bite, the marketing industry has reason to worry. Apple is a trendsetter, so if it succeeds here other companies may follow and TV as we know it could be completely reinvented.
That said, few in the television industry are unaware of the effect that the DVR has had on television viewing (and ad viewing) habits. Advertisers know it too. Their expensive ads are not getting the eyeballs they got in the past, forcing advertisers to find more effective places to spend their advertising dollars.
Will Ad-Free TV Become the Next Reality?
Only time will tell if Apple can pull this one off. If it does, advertisers may be able to obtain better rates due to a decrease in viewers and, potentially, an absence of other advertisers. Some consumers will willingly pay for ad-free TV while others will opt for free, harkening back to the old days when “sponsors” paid for programming.