One of many things the pandemic has changed in our lives is our television viewing habits. Baby boomers, like others, are cutting the cord to cable and satellite providers, and replacing them in record numbers with streaming services, mainly Netflix. Chicago entrepreneur Howard Tullman, who pulls no punches, writes for inc.com that by successfully rejecting the broadcast television model with which we grew up, Netflix is crushing the traditional broadcasters, because it is a quality product, and we will pay for that. He asks, how can we thank them?!
I’ve heard it said that TV ads are the penalty you pay for watching cheap and endless crap for free. Network television is effectively a tax on people who can’t afford something better – they have to watch this junk and the endless ads as well if they want any sort of entertainment. Network TV has become the shop window for every creepy and frightening ad for the perils of aging and dysfunction, the threat of every newly imagined and cleverly named disease, combined with incessant reruns of shows we hated from their debut. There’s also the traditional flood of car and beer ads — never mind that the average age of a new car buyer is likely to be an aging boomer.
If you’ve begun to painfully realize that the aggregate number of ads, as well as time consumed, in any 30-minute slot of prime-time television seems to grow every few months, join the club. Likewise, the bulk of cable programming is no better than the rubbish the big broadcast guys promote except that – as hard as this is to accomplish – the ads are even worse, more crudely made, and dumbed down as well. But at least they provide regular employment for broken down old jocks flogging Medicare supplements and hearing aids while otherwise unemployable or shameless actors pitch reverse mortgages and end-of-life term insurance.
This is precisely what “broadcasting” was always intended to be: a tool to reach the masses via one-size-fits-all, lowest common denominator offerings with the least objectionable material, so that you don’t change the channel. And all of it delivered through a framework to support the ads and advertisers that paid the bills. And the whole thing worked pretty well for all concerned except the viewers. None of us was really a loyal or grateful customer – we just didn’t have a better alternative.
When cable came along, it promised massive amounts of programming choices, but there was only one distributor– the dreaded cable company, selected by local government. This is why cable was always a grudge buy. There was no competition, you paid for a bunch of junk you didn’t want, and the cable company owned the local politicians and rate-setting authorities as well. Sweet deal, but not for us.
But now, if you’re willing and able to pay for the privilege, we have streaming solutions and a growing flow of podcasts (and a few well-done vodcasts) that – with the exception of Peacock, which seems like a glorified invitation to a digital root canal – represent a new attempt at narrowcasting. Smaller, more affluent, self-selecting and better identified audiences composed of folks who are actually anxious and interested in seeing the offered material and, of course, also willing to pay for it.
The entire initial premise of Netflix was that by trading your privacy and viewing preferences and choices for automated personalization you could have the system select and deliver higher-quality, more tailored, and more entertaining suggestions, recommendations, and content for you. The content was as good as anything else out there, and the discovery element was real and serious. But what has become more and more apparent is that millions of us were looking for and willing to pay for ad-free and uninterrupted entertainment.
One of the tactical errors that some of the erstwhile and flailing Netflix competitors have made is to offer a basic, less expensive service with traditional ads along with ad-free access at an upcharge, which seems to me to simply reinforce the depressing message and reality that these days only paupers, morons and cheapskates watch ad-riven network programming. If these competitive vendors had the courage of their convictions and believed in their own offerings, they’d go with a single price structure. Thinking that you can buy eyeballs and subscribers with bait-and-switch expiring offers or deep, short-term discounts (“Get 2 issues of XXX magazine for $2 and then we’ll charge you $50 for the next 6 months.”) hasn’t worked for the few survivors in the high-end magazine business. That pricing matrix is unlikely to be a solid, long-term strategy for streamers either.
But it’s going to be very interesting to see how long the new ad-free models can be sustained and whether their managers can resist the constant pressure from the market and their investors to further monetize their captive viewer eyeballs. This is the constant debate we hear every day about Twitter and others and it’s a nasty disease that no industry can withstand for too long.
But in the case of Netflix, the debate ignores a very critical data distinction. Netflix can sell actionable targeting data about its users – demographics, habits, tastes, interests, spending cycles — to advertisers without permitting them to show a single ad on Netflix itself, which would jeopardize the customers’ experiences.
You already know how this works. You look for something on Amazon or search for anything on Google and – surprise of surprises – suddenly half the other places you visit on the web are showing you ads relating to the products and services you recently researched. Targeting your travels on the internet is easy as pie. Amazon does this a lot better than Google because Amazon, unlike Google, knows your purchase behavior as well so they won’t waste your time or try your patience showing you ads for stuff you bought two days ago.
But Netflix never even has to let you know how the magic works. And even if you ask, much like Facebook, they will likely tell you that all the data they sell to third parties is anonymized so that while the ad targeters “know” your interests and preferences, you should feel comfortable that they don’t really know who you are.
So, the modest good news is that you’re unlikely to see ads on Netflix any time soon and, if their competition has any smarts at all, they’ll be careful not to put their toes in that ugly pool of sludge as well.
Howard is author and co-author of several books, including his newest, “You Can’t Win a Race With Your Mouth: And 299 Other Expert Tips from a Lifelong Entrepreneur.”