Consumer support for ads in streaming services remains solid, study finds

Dive Brief:

Fifty-seven percent of consumers report they would prefer watching ads if it meant saving $4 to $5 on a streaming service subscription, according to the latest findings from Hub Entertainment Research shared with Marketing Dive. The report also links shorter ad breaks to increased consumption.
Respondents are twice as likely to opt for a streaming service that offers both ad-free and ad-supported tiers versus using a platform that only offers “limited ads.” The majority of consumers (65%) also report using at least one free ad-supported streaming service.
The survey, conducted in November, comes on the heels of new ad-tier launches by Netflix and Disney+ and found that of those who already were subscribed to the two platforms, 35% and 24%, respectively, anticipate switching to the platforms’ ad-supported options.

Dive Insight:

During a year of persistent inflation and economic woes, ad-supported streaming is showing its potential. Over half of respondents to Hub’s survey said they would be willing to consume ads in order to save a few dollars, a level of interest that has seen little fluctuation this year.

Streaming platforms have increasingly taken to ad-supported business models this year, but their roll out has come with some challenges. Netflix in November launched its ad-supported plan, which costs $6.99 and is less than half the price of its standard package, but it has reportedly so far fallen short of its predicted success. Disney+ launched Dec. 8, equipped with over 100 advertisers, but the new ad tier came with a higher price for its traditional offering of $10.99 each month compared to the previous charge of $7.99. The increase might help explain why one in 10 Disney+ subscribers anticipate dropping their subscription entirely, per Hub’s findings.

Despite these concerns, the new additions are still drumming up interest. Aside from current subscribers looking to switch to Disney+ and Netflix’s ad-supported offering, 22% of those who do not subscribe at all to Disney+ now report an interest, with the same totals true for Netflix non-subscribers. The Q4 edition of Hub’s “TV Advertising: Fact vs. Fiction” study surveyed 3,001 U.S. consumers aged 14-74 who watch at least one hour of TV each week.

A bit more mature than the recent entrants, Discovery+ and HBO Max’s ad-supported tiers are top ranking for consumer sentiment. Of surveyed respondents who subscribe to the Discovery+ ad tier, 61% feel the number of ads during shows is reasonable, the highest total among ranked streaming platforms, followed by 53% of HBO Max ad-tier subscribers who feel the same way. Following it are Peacock (46%), Paramount+ (44%) and Hulu (43%).

Discovery+ and HBO Max are also at the top of the list when it comes to how much attention ads on the platforms receive. Thirty-seven percent of respondents for both platforms say they gave the ads nearly “complete” attention. Behind them are Hulu (23%), Paramount+ (19%) and Peacock (12%).

Ad experience is closely tied to ad engagement, the report details, with respondents who enjoyed their viewing experience, including ad load and break length, reporting that they pay attention to ads more often than those who didn’t have a favorable overall experience. Of the aspects that would make consumers more likely to pay attention to an ad, 43% wish for shorter ad breaks, followed by 42% who would be attracted to the ability to earn rewards for watching. Behind these are shorter ad length (41%), a single ad in a break (41%), ads targeted to the show being watched (34%), short ads from sponsors (33%), categories you choose (33%) and a time countdown (31%).

Though consumers are willing to buy into ad-support streaming platforms, free ad-supported platforms continue to gain traction, with 65% of consumers reporting they use at least one such as Pluto TV, the Roku Channel, the free version of Peacock and TubiTV, among others. Usage across such platforms posted a 10-percentage point uptick from Q2 of 2021, per the report. Original, exclusive content may prove to be an opportunity for these platforms, with 47% of current users reporting they would be more likely to use a free ad-supported service if they heard original content was available and 30% of non-users saying the same.