AMC Premiere Has Paradigm-Shift Potential for TV Biz

The Walking Dead Season 7 Episode
Gene Page/AMC

It’s an idea of such bold simplicity that it’s hard to understand why we haven’t already seen it in the marketplace years ago: Rather than forcing TV viewers to sit through commercials, why not allow them to pay extra to avoid them?

CBS All Access and Hulu have been among the subscription streaming services that offer ad-free versions at a higher price, but no one within the traditional pay-TV universe has gone there. Until now.

Comcast is allowing the 19 million subscribers currently paying for its Xfinity TV service to begin accessing AMC Premiere, a new offshoot of the cable network that enables subscribers to pay $5 per month to watch its shows live but without ads. In addition, AMC Premiere will be loaded with exclusive companion content and a tier of movies supplemental to what AMC already offers.

This joint effort represents one of those rare moments when you see an experiment that makes you wonder whether it’s the first instance of something that eventually becomes the new normal. Today, it’s AMC and Comcast; maybe a few years from now no self-respecting channel or ad-supported distributor would be caught dead without offering such an upgrade opportunity with its shows.

That’s because the appeal of paying for a commercial-free option is so obvious that it’s hard to believe it’s finally coming to market only now in 2017. Even before Netflix and other subscription VOD offerings came along and made everyone appreciate the ability to binge through episodes quickly without interruption, HBO was ample evidence of the value of going ad free long before then.

Premium channels like HBO are also providing inspiration here in another way: They’ve been free to wander outside of their pay-TV confines in search of new business on the streaming side (i.e. HBO Now) while the basic cable networks were restricted inside this walled garden. But now AMC may find out it can carve out an additional revenue stream just like an HBO Now, and it doesn’t even involve having to venture forth to the Internet.

And therein lies the paradigm shift: If AMC Premiere catches on, basic cable networks don’t have to just serve as a prerequisite to the additional purchase of premium channels; they can make their own premium channels and keep a good portion of that additional revenue. The pay-TV distributor will get its cut, but it’s probably well worth it considering the promotional support a Comcast can provide.

Think of how important that revenue could be at a time when basic cable networks, a huge revenue driver for the media conglomerates, are a few years into feeling the pain of what is likely secular decline as their ratings dwindle, dragging down their ad revenues and forcing increases to programming expenses. Affiliate fees are holding up comparatively better, but those year-over-year percentage increases are already starting to come down.

A revenue stream that doesn’t depend on selling ads can become a lifeline, though it raises a challenge that this new model could encounter in success: If more and more consumers start opting for ad-free viewing, advertisers looking to TV networks for maximum reach are going to start complaining.

But I’m willing to bet is that the cable networks are going to discover quickly that there’s a ceiling to just how many viewers out there hate commercials so much that they’re willing to pay to get them out of the way. Which could be great: Part of the paradigm shift is that the TV network of the future will find itself with two different audience segments. One will stick to the free ride that comes with commercials and another that pays for ad-free–but the latter will likely never reach the scale that cannibalizes the former. Free always wins, so advertisers don’t have to worry too much.

And yet I’m not so bullish on AMC Premiere that I’m confident it is going to work the way product is currently configured. It’s predicated on the notion that viewers are a fans of particular networks as opposed to particular shows. But how many shows does the average person actually watch on even their favorite ad-supported channel? Four or five at most?

So is it worth it to me to pay $5 to skip ads in the only series I watch on AMC, “The Walking Dead,” even though I hate commercials so much that I often let 15 minutes go by into a first-run episode before starting to watch it so that i can fast-forward through each commercial pod? Frankly, no. Certainly not while there’s fresh episodes on the air.

But consider an alternative. Would AMC and Comcast get more uptake if instead of making an entire channel available ad free for $5, they allowed viewers to opt in and out of ads at lesser price points for one season of a particular series or on an episode-by-episode basis? It’s basically the electronic-sell-through model a retailer like iTunes offers for TV, but live (and priced not to cannibalize home entertainment).

Better yet, imagine how compelling the impulse-purchase opportunity would be if at 8:59 p.m. on a future Sunday from now I am about to watch “The Walking Dead” on the linear feed and a bug appears on the lower-third of my screen offering the option to upgrade to an ad-free option with just a click of the remote?

Of course, it’s entirely possible the smart folks at Comcast and AMC know all of this and eventually intend to offer something exactly like I am describing, but the channel-centric option is the more prudent place to start because it’s a higher-margin opportunity. Fair enough, but I’m willing to bet a  show-centric opportunity will get more bites at the apple.

Ultimately, what may really elevate AMC Premiere is for more arrows to come into its quiver than just the ad-free feature. Yes, it’s supposedly packed with extra content, but it’s hard to believe that’s going to be any more compelling than the kind of bonus material available on DVDs, the programming equivalent of parsley.

But what if AMC Premiere allowed users to watch episodes before they were available on the linear channel, as HBO Now occasionally does? Or better yet: What if AMC began to make original shows that only appeared on AMC Premiere and not on the linear channel?

That is the inevitable end point of where this is all going, and that’s game-changing. There’s incredible potential in this model but it’s going to take a lot of time and experimentation to really nail it.

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  1. Pab says:

    Ugh… live tv is not, and won’t be the future. This is just a temporary bandaid before all the major cable channels move to a Netflix/Amazon/Hulo model.

  2. Prime says:

    What difference does it make? The shows will still have awkward cliffhangers and cutaways every 15 minutes. The shows will actually flow better with commercials inserted

    • jedi77 says:

      Well, not exactly.
      You can’t seriously mean that these shows work better with commercials than they do on Netflix?
      As long as the ‘fade out black screen’ isn’t on too long (recently saw a show on Netflix where the black screen at what would have been a commercial break was 2-3 seconds long) the flow is just fine.

      I haven’t watched a show with commercials inserted into it for 10-15 years.
      I live in Denmark and the only channels that have commercial breaks are crap channels anyway. The standard channels only have commercials between the shows, not in them.

    • Dahl says:

      They’d need way, way, way, way better shows.

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