ESPN Strips Out Ads on TV Everywhere Streams

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ESPN (s DIS) recently rolled out its TV Everywhere service to Time Warner Cable (s TWC) subscribers, making live and on-demand video from its broadcasts available online for the first time. But consumers may be pleasantly surprised to find that there’s something missing from the online version of the video service — ads.

BTIG Research analyst Richard Greenfield noted the lack of ads in a research note this morning, questioning why the ESPN (s DIS) broadband service, which provides an authenticated version of the cable network’s live broadcast, stripped out all advertising whenever the network would jump to a commercial break. Instead, viewers only got to watch an animated ESPN logo for the minutes in-between commercial breaks.

The ESPN TV Everywhere service is notable because, while other cable networks like HBO (s TWX) and Showtime (s CBS) had made their content available online when subscribers entered in a password or some sort of login to verify their identities — and the channels that they’ve subscribed to — most of what they’ve served up so far has been on-demand content. ESPN has been the first cable network to start streaming its live broadcast online 24 hours a day. Still, it’s surprising that the ESPN TV Everywhere offering doesn’t have ads, especially considering that its ESPN3 broadband service, which isn’t authenticated but is only available to cable subs whose providers have struck deals with the programmers, has in-stream ads.

So why don’t ESPNs authenticated streams include ads? An ESPN spokesperson responded to our email request, saying that the lack of ads is due to rights differences between online and TV broadcasts. But don’t get too excited, as ad-free streams could come to an end at some point in the future. She writes:

“Due to rights differences online and on TV, our authenticated channels currently feature an animated logo during traditional commercial time. In the future we expect to add commercials to the online versions of the networks, using the same system ESPN pioneered for live, dynamic commercial insertion on”

While rights are one issue, another may be the measurement of online streams, and the ability to serve the same ads online as on the live broadcast. As Greenfield points out in his research note, there currently isn’t a third-party tracking service that allows programmers to match online viewing with their linear viewing on cable. While the temptation may be to run the same ads online as those that appear on cable, the online medium can provide higher-value interactive ads.

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