TV sets themselves have ads built in. TVs and other hardware was sold for years at profitable margins, and then some genius realized they could undercut competitors by putting ads in the interface and making money later. After that, it was just a race to the bottom.
Which is why I'm starting to believe there should be regulations preventing this. I have no idea how could they work while avoiding disastrous second-order effects, but what I want to see is for "ad-subsidized" business model to be legally impossible. Along with its cousin, "razor and blades" model. This is on the grounds that these models are customer-hostile, and make it impossible for less exploitative businesses to compete.
I think Kindle has proven that people are fine with paying less for something ad supported. I think the better option is just more businesses giving zealots the option to pay more for the same thing without ads.
I don't know how it worked out on the US market. It worked out well on Polish market, because US Kindle ads were completely irrelevant and thus ignored as visual noise. And also I recall there was a trick to get rid of them and keep the cheaper Kindle.
