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Why China's ban on TV ads only hurts viewers.

Recently it was announced that ads will be banned from the middle of TV dramas in China starting January 1st, 2012.

In China, this strategy is a step towards tightening already strained restrictions on television. Could a similar ban ever take place in the United States or elsewhere? We can’t really say. What we can assume, however, is that removing ads from a network will only hurt viewers, rather than make for a better experience. Why?

Well, as you know: ads make up a good majority of television network revenues, removing those profits from the networks means they would have to then makeup the lost dollars in other ways. In the United States, such a ban would force networks to increase their subscription prices even more.

Online streaming services such as Hulu and HBO Go are capable of using entirely different advertising strategies to make up for the revenues they lose by streaming shows (rather than broadcasting them over more traditional television connections), but there isn’t really any other way for networks to make up for the revenue they would lose by cutting out advertising from even a few minutes of broadcast time.

There are hundreds of thousands of dollars to be made in just 30 seconds of advertising on TV, and such a hit to the network would only result in higher prices. At least, that’s what the situation looks like right now.

What do you think? Could you see the United States banning commercials from a set time on TV?

Photo by Paul Sapiano.

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