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Ad-Supported AI
& Who Is Winning The Streaming Wars
Ad Supported AI, brought to you by Deep-Seek
The era of paywalled AI is facing a challenge, as DeepSeek pioneers a new age of ad-supported AI models. This innovative approach aims to democratize access to powerful AI tools by offering them for free, supported by revenue generated from strategically placed advertisements. DeepSeek, gaining recognition as a formidable competitor to OpenAI, is betting that this model will enable broader adoption, particularly among users who may be priced out by subscription fees. DeepSeek's ad-supported AI is rapidly gaining traction, positioning itself as a key player in the evolving AI landscape and potentially disrupting the existing pricing structure.
Indeed, in the last month a number of options — DeepSeek, ChatGPT, and now Grok — have traded places at the top of the app stores. Popularity seems to follow whoever has the newest, freest model. Generative AI, it seems, has become a commodity for typical consumers. (There’s certainly a lot more potential — and money — in enterprise use cases, but even there it seems people are still searching for the killer use case.) As far as consumer generative AI, we have a situation where there’s more and more money going out and now potentially less coming in. Something has got to give and advertising seems to be the fail-safe of the internet era, which always comes to the rescue.
As the AI race intensifies, DeepSeek's ad-supported approach may prove to be a game-changer, reshaping the future of AI accessibility and utilization. By making AI accessible to a wider audience, DeepSeek is not only challenging the status quo but also potentially accelerating the development and refinement of AI technologies. The success of this model hinges on striking a balance between monetization and user experience, ensuring that the ads are relevant and non-intrusive.
YouTube Wants to Look a Little Like Netflix…Netflix Wants The Same
While Netflix boasts a record-breaking 300 million paying subscribers, YouTube is quietly dominating the US television streaming landscape with its 100 million Premium subscribers in February, adding another dimension to its revenue streams. The streaming giants are now converging on each other’s turf. Netflix, once vehemently opposed to advertising, now sees over 55% of new sign-ups in ad-supported regions opting for its cheaper, ad-backed plan. While Netflix acknowledges ads are "not a material component" of its total revenue yet, they anticipate the ad business will "transition from crawl to walk" in 2025.
YouTube, fueled by a staggering $36 billion in ad revenue in 2024, is exploring new ways to monetize its massive user base with a cheaper, ad-free "Premium Lite" subscription tier. This move allows users to ditch ads on most content, excluding music videos, for less than the current $13.99/month Premium price. Last year, YouTube's total revenue topped $50 billion, with roughly 70% coming from ads and 30% from subscriptions, proving that it is no longer simply a free video site. YouTube is increasingly competing with streaming giants like Netflix for viewers' attention, especially as viewership on TVs overtakes mobile devices. This strategic shift mirrors Netflix's foray into ad-supported tiers, and allows YouTube to reduce the customer's ad fatigue while also keeping the core business going.
Starbucks’ Layoffs and price Inflation (2014-2024)
Starbucks is embarking on a major overhaul, underscored by the layoff of 1,100 corporate workers, as the coffee giant grapples with declining sales. This cost-cutting measure comes amidst reports of significant price increases on popular menu items, with cake pops soaring 97% and tall mocha frappuccinos climbing 32% since 2014. Starbucks is already facing headwinds: a 3% drop in global sales and a 2% dip in North American sales during its 2024 fiscal year.
CEO Brian Niccol's turnaround plan involves a multi-pronged approach to revive the brand. Besides workforce reductions and reduced discounting, Starbucks plans to scrap 30% of its menu items over the next seven months and discontinue underperforming drinks in early March. Amidst these changes, the company is bringing back ceramic mugs, Sharpies for handwritten notes on cups and focusing on core menu offerings.