Disney would prefer I see ads

Posted by Matt Birchler
— 1 min read

Ben Thompson: Disney Earnings, A Split Disney?, ESPN’s Advertising

Advertising takes away the trade-offs: more customers mean more money, both in terms of increased inventory and also increased leverage on your advertising infrastructure; meanwhile, the lower prices made possible by ads lead to decreased churn. At the same time, the upside for advertising revenue is effectively infinite, given that increased prices-per-ad aren’t felt by consumers; if anything, it means they are getting better targeted and thus more valuable ads.

Two things about this are frustrating, though:

  1. The ad tier for these services is more expensive than the ad-free tiers used to be. We’re paying more and getting ads now, so it’s not like consumers are actually saving money here.
  2. It depresses the hell out of me that advertising tiers are more profitable for these companies, so it’s actually in their interest to get me to subscribe to the ad-supported tier.