Ad Supported Movies - Back To The Future

When I was a kid we used to watch movies on TV and they’d have commercial breaks in them. That was when we’d run to the kitchen for a drink, head to the bathroom, or just chill out for a minute or two. I have fond memories of watching movies that way.

That’s what we did this weekend in our home. We’ve got Hulu hooked up to our big screen TV two ways, via the browser on our mac mini and via boxee, also running on our mac mini (but you can also run Boxee on Apple TV).

On saturday afternoon my oldest daughter was scrolling through the films in Hulu and found a Gus Van Sant film called Finding Forrester. So we decided to watch it. There were four or five commercial breaks during the film, we broke once so I could pick up my son at his basketball practice, and we were able to watch the whole thing before we all went out on Sat evening. We never once had a buffering issue and although it was not HD, it looked way better than standard TV on the big screen.

Yesterday evening, Josh and I were alone and we decided to watch Finding Forrester again. No problem, we went to the mac mini, loaded up Hulu via Boxee, and watched it again.

This is the future of the movie business I think. Sure, we’ll still go to the theater with friends and family for a night out. But when the entire library of films is available for streaming on demand via the Internet, that’s how we’ll choose to watch them. And the commercial interruptions? No problem, like it was when I was 10, it’s the perfect time to run to the bathroom or get a glass of water and a twizzler.

#VC & Technology

Comments (Archived):

  1. Shripriya

    All movies screened at theaters in India have an intermission. It’s the theater’s way to make money by ensuring people go to the concession stands.Indian filmmakers know this and so they structure their films in a way that there can be an intermission without drastically affecting the watching experience. Hollywood movies however, just get chopped anywhere and stopped for an intermission, sometimes to the detriment of the flow of the film.So if breaks are really the future of movies, filmmakers will need to account for that so it can break nicely and not affect the flow.

  2. andyswan

    I agree 100%. I mean….so many times we will be sitting around watching TV and a movie we like is coming on. Then we look over about 12 feet away sits the DVD of that movie, likely still in its wrapper.We could pop it in and avoid the commercials….but we ALWAYS opt for the TV version. Just feels like less commitment, more flexibility and like you said….the opportunity to get some cookies in the oven or build a fire during the breaks.I guess it comes down to the perception that when you watch a DVD, you sorta feel like you have to “set the environment” prior to getting started….but when it’s on TV, you’ve got an evolving experience!

    1. kenberger

      It’s an interesting phenomenon. It’s also true that most movies may be dloaded via bittorrent, many of excellent quality. But it takes some tech proficiency and you must plan in advance (takes a while to dload). With services like Hulu, there’s always something on to suit the mood.

  3. Chris Dodge

    I’ve been following Boxee for some time now. They are an interesting team and the software looks great. I don’t know how much effort they should put behind their set-top box HW, but it’s a terrific software platform for the various existing vendors. I hope to see Boxee running on Roku at some point.I’ve been working in video distribution over the Internet for about 4 years now. The biggest barrier is the expectations with the content providers (i.e. Studios) and upfront financial guarantees that they expect. It’s good to see the MGM/YouTube experiment, but I wonder when the tipping point is going to be. Even though they have been reported to be reluctant to deal with them, right now the only people making money for the studios is likely iTunes with their download-to-own/rent models.Also, something to consider, at what point do ISPs and other data carriers expect to be compensated for the increased load on their networks? That could significantly change the economics of delivering content on-demand over IP networks.

  4. sfmitch

    Doesn’t the low picture quality bother you?Running Hulu full screen on my 15″ laptop looks mediocre, I can’t imagine blowing it up further.

    1. fredwilson

      It’s an amazingly good pictureCheck out this pic of Hulu on my 60² screen…

  5. Rob L

    Fred,I switched to internet-only TV this past summer. It’s great and I’ll never go back to cable / Netflix / buying movies.The resistance of broadcasters and production companies to expand online offerings mirrors the recent history of the recording industry. However, there is a bright light for video-content. As you said, short breaks are not seriously intrusive to the experience, certainly so when compared to the 3 minute breaks currently on TV. This offers opportunity for production and distribution a viable business model now. With the opportunity, these companies should take lesson from the music industry and become progressive in expanding their online libraries to take control of the online marketplace before sites such as and become the Napsters and Limewires of streaming content. Lucky for them, distribution companies have the resources to stream better video and sound quality as is shown by Moreover, per-user revenue opportunities may even be greater online versus traditional broadcast and distribution due to ability to target ads based on user profiles.

    1. Rob L

      FYI: I bought a refurbished desktop PC which I connected to a 50″ LCD.

  6. mike

    I’m sorry Fred, I can’t believe that you think this is the future of watching movies on television.Here in the UK, we get two types of movies. BBC, who do not advertise anything and Sky Movies, which is a subscription package and then all the other channels who run adds every 30 mins or so. I refuse, point blank, to watch movies live that have adverts and even those I TIVO fast forward through.If people are going to pre-record and fast forward the adverts, the CPMs basically come down considerably and you’ll have to have even more ads to fund the movie.Movies are a form of art and breaking the continuity with an advert break (even breaking continuity to fast forward) ruins the experience. If there’s a future where all movies on TV have adverts for free, they will ruin the art. Plots will be built around advert breaks, which will destroy the pace and beauty of a movie. I want no part of this future.In fact, in general, with what I read online, many people think the future of everything is free with ad funding. I can’t subscribe to this either. Again oversupply of adverts and adverts becoming blind-spots will send the CPMs crashing. This either means, again, more and more adverts to cover the shortfall, or cheaper movies. In this world, we will get no quality. Same argument with all music being free, which I can’t believe in either. That will just produce thousands of average pop records and, again, I want no part of that.

    1. fredwilson

      There will always be a paid version for people who don’t want to watch theadsBut look at satellite radio versus free radioPaid ad free media is niche, free ad supported media is mainstream

      1. mike

        But the medium is very different. Songs are short and the medium lends itself towards putting stuff in between them. Movies are not, and do not.

  7. Brian

    If it is less than 720p, I do not want to watch it. Until these streaming services can support higher resolutions, I do not think they will get much interest. Why go to hulu if I can get these shows/movies on demand and pause if I need to take a break. As it is now, I dvr everything and just fast forward through the commercials unless it is a live sporting event.As a parent, I want fewer commercials in my home, not more.I think eventually ISP will start charging, since all of this streaming/downloading is clogging up the internet. If net neutrality become a reality, we will never see this take off since telcom company’s will not invest in the increased speeds to support it.

    1. fredwilson

      I think convenience trumps quality all day longLook at streaming music, it’s explodingFile based music listening will be like vinyl in five years

  8. ceonyc

    Some scenes from Finding Forrester were filmed up at Regis. 🙂

  9. kenberger

    This is indeed big, huge in fact. The Hulu player and Move Networks (providers of’s player) have really hit it, picture today is just short of breathtaking if you are sending your computer video output to an hdtv or even decent CRT screen.The next step is to merge the TV and PC better. AppleTV ain’t the answer.An excellent product out now to enable this (I’ve mentioned it before) is D-Link’s PC-on-TV:…PC only for now, no mac yet :(You plug it into your tv, then even if you just have a laptop, the video gets transmitted by wi-fi or wire to the TV screen. No codecs needed for the device, no prob if you lack decent video out sockets, it just takes your computer’s output and displays it. And you get a full-fledged remote control (iPhone remote capability would be cool

  10. kidmercury

    “No problem, like it was when I was 10, it’s the perfect time to run to the bathroom or get a glass of water and a twizzler.”yes, no problem for you — but a problem for the advertiser, which is why interruption based advertising is on its way out. communities built around movies (and ensuing business models built around social networking), merchandise related to the movie, and product placement are IMO key drivers to new business models for movies.the 9/11 truth movie loose change is a nice example of what the future of movies looks like. key attributes:1. initial version made on a laptop for a few thousand bucks2. released for free on the internet3. developed a grassroots following that fostered a large community 4. remixing and free distribution encouraged, and understood as part of the marketing value and good for building trust needed to sell products5. revenue comes from merchandise sales (they can do A LOT more with this…but they are too into charity and all that stuff and not really new media business people; thus far it is clothing, music, books)6. community used to co-create the product (i.e. people submitting their own footage, audio tracks, etc)7. an iterative process in which later versions were released based on the success of the initial one that incorporated feedback from the communityas the economy worsens big, bloated stuff rooted in status quo intellectual property rights, interruption advertising, and stuff that ignores the community will die, so that the new media revolution can be borne.

    1. fredwilson

      Great points

  11. Eric

    I don’t have a problem with the ads on Hulu, but if they offered me the option of paying a monthly fee for ad free, I’d probably take it. I pay for Netflix to get the same thing. And I would happily pay for HBO if they would just release their content online. Ads are all well and good for people who don’t want to pay for content, but lots of people want content without interruptions and at the highest quality possible. These people will happily pay a big premium for it and I’m one of those people.

  12. johndodds

    On the one hand I want to suggest that part of the essence of cinema is the shared audience experience, but then news comes this week in UK of a cinema chain who are creating adult-only screenings for movies (regardless of certification) in light of disruptive viewing habits of younger patrons.

  13. VideoFuture

    While I believe that Fred is correct about the convergence of screens to a single viewing platform that will be able to access video on demand (as well as TV shows and web videos), I am not sure about the ad-interrupted movies replacing pay per view or pay per download or rentals. I would much rather pay a few dollars to view a film that I choose when I want to, with the power to pause when I want to pause and use the bathroom or take a call or go to sleep.Having focused on the future of TV and video for nearly 15 years (my new company just launched, which shows where I think TV/Video news and humor are heading), my call is that an online, on demand, fully controllable (stop and start it when you want for like 48 hours) pay per view NO ADVERTISEMENT option will prevail. Probably with a “pay you to watch the ads” lower cost alternative, which many of us will not choose.

    1. fredwilson

      My experience says free always beats paidLook at satellite radio compared to free over the air radio

      1. VideoFuture

        Very good example but I question how applicable it is. You could also say that movies on free ad-supported 20th century-style network TV are also viewed by far larger audiences than they were, and are, in pay movies theaters. But it is still the theaters (domestic + international) PLUS sales PLUS rental movie/Blockbuster/Netflix model that brings studios the vast majority of all film studio revenue TO THIS DAY. And this is what makes big budget pictures possible. I find this to be the more apples and apples comparison regarding the interesting crystal ball question of what the future of movies looks like.

      2. Mac

        “Free always beats paid” doesn’t justify your “it’s not a bug, it’s a feature” attitude towards unskippable commercial interruptions. Free or not, you just can’t rationally state that broadcaster-controlled advertising is somehow better than an uninterrupted viewer-controlled experience.Indeed, I’d suggest the old fashioned commercial-supported model isn’t really free either — I pay for it with the frustration of sitting through distracting, noisy commercials (I don’t really have to pee all that often, sorry), the inability to pause when I need to, and the fact that I usually am actually paying for the commercial-interruption content I’m viewing anyway (cable, satellite, whatever).

        1. latest movies

          I think people will go to a free not to the paid one.

  14. Ori

    Mac Mini is just a great solution for a home media center!!! by the way, it is worth waitin if you want one because rumor says that Apple is going to introduce a new one before the year comments at

  15. Chris

    Really cool to see the breadth of comments on these issues. My takeaway is that there are significant differences in cultural expectations (US-EU-Indea) as well as willingness to pay, and that the TV/Film services over the net sector (for these reasons as well as local content preferences) will have multiple winners.Also interesting to see that no one is complaining about bandwidth and latency issues btw. Maybe those challenges are solved?