Television revenue comes from two main sources: subscription fees and advertising. But since commercial-free programming from on-demand sources like Netflix and HBO have been dominating the TV landscape, viewers have far less tolerance for commercials than before. Case and point: Though it had almost 19% fewer ads than the 2012 London Olympics, viewers of the 2016 Rio Olympics sent scores of complaints of too many commercials to NBCUniversal.
In response to this changing landscape, Comcast will allow its 19 million subscribers to pay an extra $5 per month for AMC Premiere, a commercial-free add-on. It’s essentially converting AMC to a premium cable model, where a consumer pays an extra fee for channels like HBO and Showtime.
Hybrids of this freemium version exists already for Hulu, which offers a $7.99 commercial version and a commercial-free version ($11.99 a month), but this strategy hasn’t until now been employed by a standard cable channel.
The instant-gratification culture that smartphones have produced and instant, free access may have hurt much of longform content and attention spans, but the subscription model has emerged as something people are actually willing to pay for (that’s how much people hate commercials). The attention span, it seems, works on advertising too.
As Dilbert’s Scott Adams put it, the commercials are also bad and distressing to watch: pharma drugs with long lists of side effects, sad pet rescue commercials, and paranoia-inducing security products. “Television is training me to not watch TV,” Adams wrote in February. “I see no hope of television surviving in the long run if they stick with their current business model of training their customers to hate the entire television experience.”
Paying $5 a month to be able to watch live episodes of “Fear the Walking Dead” and “Better Call Saul” without commercials isn’t a ton, but there is likely an upper limit to the amount of single subscriptions (Netflix, Amazon Prime, Hulu, HBO Now, etc.) that a person would buy. Clearly, $7 here and $12 there can add up quickly to cable-level prices. But AMC has an advantage in this landscape: Unlike a pure meritocracy where only the better cord-cutting services survive, a cable subscriber still has AMC in the hybrid model.
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