Now TV companies are questioning the ad-funded content model

By March 3, 2010TV

Last week I wrote about the growing unease at the major record labels with ad funded music streaming services, and now it looks like something similar is happening with Hulu.  The following is from a New York Times article dated Monday this week:

Unable to make the digital media dollars add up to their liking, Viacom will remove “The Daily Show with Jon Stewart,” “The Colbert Report” and other Comedy Central television shows from Hulu next week.

The Daily Show and The Colbert Report are two of the most popular shows on Hulu so this is a pretty big deal.  Viacom’s reasons for removing the shows are of course unclear and could range from the ad splits being too low to be interesting, through a short term bargaining position, to a desire to protect their existing cable subscription business – and only time will tell.

The other interesting thing here is that this move comes despite Hulu experimenting with a bunch of innovative ad formats.

I suspect that we are heading towards a world where production costs come down (including stars’ salaries) enabling production companies to make profits on shows with lower revenues, enabling them to distribute successfully on ad-funded sites – for a majority of shows at least.  Simultaneously innovation with ad formats will drive up the revenues achievable via this business model.

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  • Interesting Mr B. It's also already happening in other parts of the web:

    “Rather than try sell ads to support content that costs a particular amount, the company has dropped the cost of production to make sure it can be supported by what advertisers are willing to pay. “

    http://www.poynter.org/column.asp?aid=173972&id=31

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  • It will be interesting to see if this model works for high quality content!

    Thanks for the link.

  • Steve

    Removing “Daily Show” from Hulu is short-sighted and infuriating. At least on Hulu I'm forced to watch ads; when I Tivo it on my home TV, I never see an add. And I watch these shows on Hulu 75% of time due to the fact that I'm on the road a lot.

  • I agree, it most likely is short-sighted, but production companies need to explore low probability but higher revenue models before they are ready to accept this argument.