Aldo Agostinelli

Recently multimedia contents seem to have split in two: some may be accessed by subscribing to a payment service without the hassle of advertising; the others are totally free of charge for users but are full of commercials.

Two very different business models based on different assumptions. The constellation of services provided by Netflix, Amazon Prime Video and, more recently, by Apple may be taken as an example of the first type ( advertising free ). Last March, the Cupertino company  launched  Apple TV+, a platform offering original programmes, such as films, documentaries and TV series made in partnership with popular names belonging to the television star system, such as Steven Spielberg and Oprah Winfrey. The service is provided on demand and will be accessible directly from the “Apple TV” app which is expected to be released in May and will be available for iPhone, iPad, Mac, smart TVs streaming devices. Users will be able to subscribe to their favourite Apple TV Channels, in addition to some famous international ones such as Hbo, Cbs and Mtv Hits. The app has been designed to learn users’ habits and tastes and suggest contents accordingly. All this, without any commercial (Apple event 2019: Apple Card, TV Plus, News Plus, Arcade and everything just announced).

Incidentally: 28% of global media consumptions will have gone mobile by 2020 (in 2011 the percentage was 5%), and such figure is bound to increase even further with the introduction of 5G. Consequently, we have been spending more and more time watching audio/video contents on the displays of our smartphones: in 2018 the average was 470 minutes a day, in two years time it is expected to be 492 minutes. Therefore, introducing an app for streaming contents like the Apple one is a strategic move (Mobile internet to reach 28% of media use in 2020).

Traditional TV has been dethroned

TV, an apparently irreplaceable household device devoted to entertainment, has officially been dethroned. And, has explained by Aldo Grasso, viewers have changed as well, since “nowadays, they are virtually expected to put in place several, different practices and ways to watch contents”. A sort of multi-vision requiring the use of different devices. So the big “Big Techs” like Apple and Amazon, have evolved into media companies, and Netflix is actually ruling and expanding its share of the digital market (TV at the time of  Apple and Google looks more like a library ).

With reference to YouTube, its being totally free of charge is one of the factors which have pushed Google not to use it for the production of series and films. Production costs are high and its users are not accustomed/willing to pay to watch contents. Better focusing on music and gaming, then, since last year they attracted 15 billion dollars earnings from advertising (YouTube Bows Out of Hollywood Arms Race With Netflix and Amazon).

Free services have their own ( huge ) audience

When it comes to free of charge services for users and limitless advertising Tubi is the new must. Available both via app and web, this platform is 100% funded by advertising. Before, during and after programmes. There is neither a premium version of it nor a credit card which may help you avoiding commercials. However, since they are not stupid and they don’t want users to go away, on the contrary, they want to attract them, commercials are short and the overall advertising broadcast along with each content is under two minutes. Tubi doesn’t produce its own programmes and offers third parties’ products.
According to the company report, at the moment, they have a library of over 50 thousand titles and partnerships with Lionsgate, Paramount, MGM and Starz. However, the formula is working well. To the point that investments into film and series licenses for 2019 have doubled. The target is to offer its users 99% of the contents available on the market (Tubi: Everything you need to know about the free movie and TV streaming service) and to expand outside the United States, especially into the biggest English-speaking areas such as India and West Africa.
The sore point: don’t rush to install the Tubi app on your smartphone since, due to the GDPR, in Italy it is not available, yet.

Business is not made only in one way, this is obvious. Nevertheless, the former formula is worth being further analyzed. Brands are cut off from the adv free formula. Should such model become widespread what impact will it be on brands and advertising? And what about publishers and producers? Will such mechanism be financially satisfying for them? My guess is, we are about to face new challenges.

Would you rather watch free contents with advertising or pay for adv free ones? Tweet @agostinellialdo.

To find out more about the digital world, you may read my latest book: “People Are Media” 

If you liked this post, you may alos like “All against Google and Facebook: the adv duopoly shall stop

Aldo Agostinelli