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Forums - Microsoft - Microsoft to launch TV-style adverts on Xbox Live

D-Joe said:
Jereel Hunter said:
I don't think people understand the announcement. They assume ads will be popping up everywhere.
Do you use the hulu app? Hulu provides their own ads, it is built into their app. If I use Hulu on the PC or the Xbox, I get the same ads.

But this is saying MS gives the functionality to provide the ads. What does this mean? Let's say you're too cheap to subscribe to netflix. They could launch a Free NetFlix Lite - and allow basically a copy of the netflix app to run, except with commercials added automatically. If a site like Hulu wants targetted advertising, they can only gauge what you might like based on what you watch on Hulu. As a platform, MS is better set up to know about the user - based on games, shows, time spent, % of money spent on certain types of entertainment, etc. MS Handles the advertising, and coordinated with the content provider, who focuses on content. It would allow smaller providers more targeted advertising, and encourages more free services. It also allows smaller companies who may have trouble securing advertisers to provide content.
In short, until MS starts to abuse it, there's no cause for concern. More TV ads are why we have a bunch of channels today. Ads pay for more entertainment. No ads, no shows.

what's that mean

they just find more partners?

Yes.

Let's say you're a smaller content provider. Or a production company looking to open up an additional revenue stream. Having to secure advertising for your (relatively) small offering may be the difference between making your own service financially viable as an alternate revenue stream, and not. Especially since you won't be able to do very effective targetted advertising. This would allow content providers to integrate Microsoft's ad services into their own applications.

A site like Hulu always has the "did this ad apply to you?" in the corner. And every few shows it will ask you a question about your likes/habits. Over time, they can get to know you, and target the ads. But Hulu is huge, with unlimited content. Most sites can't assume that they can keep you coming back, several hours a week forever, so they'd never get all the data that hulu can. However, Microsoft can. They do the research, and line up advertisers, and it allows smaller companies to focus on just getting content.



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I really don't distinguish all of those. In the end, revenue is revenue. Yes, all of those services make money and revenue. My point is that they aren't making ENOUGH, to offset their costs. And my point is that we don't really know how much Xbox Live costs Microsoft.

Also, there's nothing wrong with making profit. Even if Xbox Live is profitable, MS should make a trade off choice between ads and the user experience. If it's too intrusive, then they will lose customers and revenue. They need to find the right balance.

 

Yeah Microsoft makes quite a bit of money from Xbox live, 65% profit after production costs. 

Source

Microsoft is a company and they should seek to optimize profits and the ads that are announced would only go with with TV and video apps not intruding on gaming. Also the ads are only 15-30 seconds long for the media aps, seems inqonsiquential IMO. All in all the ads seem to be at a good balance and MS will be making even more profit.