AI, Streaming Ads and the Coming Instagram Effect
Amazon, Netflix and Disney are ready to duke it out with product placement, shoppable elements and more personalization that will upend TV
“Netflix boss explains why the streaming service will never have commercials.”
That headline, from fall 2020, was of course just one of many such declarations the streamer made about advertising. But as with such 2020 staples as Tiger King and sourdough starters, this statement is now a relic of the past.
Netflix launched its ad tier in November 2022, putting it ahead of Amazon Prime Video which moved most of its subscribers to an ad tier in January, but behind Hulu, Peacock and the free advertising-supported video-on-demand (AVOD) services such as Tubi, which according to Nielsen data had an average viewership in May greater than Disney+, Max and Paramount+.
My articles usually focus on how you — the producer, the creator, the Hollywood power player — can integrate AI into your business. But today I’m taking a broader look at how the industry’s heightened focus on ad-based streaming is also an AI story.
The rise of AI will play a significant role in the pivot to ads. Tech platforms have so much data that allows them to target advertising; AI can theoretically supercharge that, allowing companies and their advertisers to target TV ads the way they are on Instagram or TikTok. In addition, the emergence of generative AI could allow for the creation of virtually limitless versions of a spot to personalize them specifically to individuals. The idea, in its most utopian form, is that viewers would only get ads they want — and ones that would be far more likely to inspire a purchase.
Those capabilities will affect not only the ads but also the content as AI will likely usher in a new generation of product placement and integrated sponsorships that will impact the content.
So as the Streaming Wars move to the ad tier, the companies which figure this out will be the most likely to succeed. So who will win? Legacy players who know how to sell ads but are trying out new paradigms? Or tech players which are now trying to leverage AI to get into one of the oldest businesses on Earth?
In this article, you’ll learn:
Why shows will have to account for ad breaks in new ways
The two main types of AI and the role each plays in changing advertising-supported content distribution
How Instagram and TikTok signal where AI-powered ad-based streaming is going
Why AI will usher in an explosion in product placement
How Amazon could use AI to power a new kind of interactive shopping
What Netflix’s long history of recommendation algorithms means in the age of AI
The legacy streamer with the best chance of competing in an AI-powered, ad-tier world
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Erik Barmack is a working producer and the founder of Wild Sheep Content. He also runs a news site dedicated to AI in the entertainment industry called AI in Hollywood. Jocelyn Wexler contributed additional research to this piece.
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