Netflix is a pay service, so ads (so far) have not been an issue. Or are they? Even though Netflix is ad free, most of the DVDs it rents are not. They usually contain at least three trailers for other films. These are placed by the distributor, not Netflix. (If you know the secret of the “skip” button on your remote, you can usually get by them). If this is acceptable on DVDs, can streamed movies remain immune, or will streaming ads be too tantalizing to resist?

I doubt if anyone in Hollywood has thought of the question yet. But their counterparts in streaming TV sure have. The battle raging right now is between TV networks and Hulu…that plucky online service, (which they own), that has become #2 to YouTube in streaming content. The networks and their content providers want Hulu to increase its ads per hour from six to nine. That would put them just about even with over-the-air TV. Hulu is resisting. Even though studies show people will sit still for more ads, Hulu doubts it. I think they are right.

There is increasing pressure from legacy media to either cram more commercials onto streaming services, or place the services behind pay walls. Either way the public loses, and ultimately the advertisers or content owners lose too. The future clearly belongs to two concepts: embedded ads targeted for relevance, and freemium pay walls (part free, part pay).

Servicing this new environment takes imagination. As much imagination as creating the shows or movies that draw people to the ads. Actually, it has always been thus. The media business is flaying in an era when it should be thrusting towards new concepts like ads as characters, ads as instruction manuals, ads as value added content.

Some of the cleverest ideas have come from amateur ads on YouTube. Most companies fear this because they can not control the outcome, nor can they measure it.Like it our not, it is part of the future, and the future is out of their control.