July 26, 2021
As the cost of stacking multiple streaming subscriptions rises, free-ad-supported TV (FAST) platforms are gaining users. But new data from Hub Research’s annual “Monetization of Video” study suggests that tiered platforms — where viewers can choose between a paid, ad-free option and a less expensive (or free), ad-supported option — appeal to the largest cross-section of viewers.
In the survey, conducted in June among 1,607 U.S. TV viewers age 16-74, respondents were divided into two groups. Each group was asked to choose from three hypothetical streaming services with identical content.
Group one chose from a paid, ad-free subscription, a free-with-ads service, and a paid, limited-ads subscription (“fewer ads than you’d see on regular live TV”).
Group two chose from the same options, except the limited-ads service was replaced with a paid service offering two tiers to choose from: ad-free and ad-supported.
According to the data, almost twice as many consumers chose the service with tiered options (36%) as the service with a limited-ad option only (19%).
The percentage of respondents choosing the tiered service was just as high as the percentage choosing free-with-ads, and higher than the percentage choosing the service with only a single, ad-free option.
In a question asked before the ad-supported tier of HBO Max launched in June, almost 40% of current HBO Max respondents said they’d consider switching to the ad-supported tier. But more than a quarter of those who don’t subscribe to Max said they’d consider signing up with a less-expensive ad-supported tier as an option.
“It’s true that some TV viewers will do almost anything, including paying a premium, to avoid ads. But there are many who will choose ad-supported TV if it saves money or lets them watch a show they can’t watch somewhere else,” Jon Giegengack, one of the study’s authors, said in a statement. “Tiered plans give viewers control of their experience. Whether they watch with ads or not, everyone is getting an experience they chose, and not one chosen for them.”