Study: Majority of Consumers Willing to See Ads for Cheaper Streaming

Study: Majority of Consumers Willing to See Ads for Cheaper Streaming

The majority of viewers are willing to endure ads in order to pay less for streaming services, according to the Q4 2022 Hub “TV Advertising: Fact vs. Fiction” study of U.S. consumers.

In the study, 57% of respondents said they’d rather watch ads and pay $4 to $5 less per month for a streaming service. Preference for less-expensive ad-supported tiers over more-expensive ad-free tiers has remained relatively stable over the past year.

The majority of consumers in the survey also said that, given the choice, they would opt for a platform that offered them the option of both ad-free and ad-supported tiers. When asked to choose between three hypothetical TV services, viewers who were given the option to choose a platform with tiered service — some with ads, some without — did so nearly two times as often as those shown a platform that only offered “limited ads.”

As Netflix and Disney+ have recently released new ad-supported tiers, some subscribers said they plan to switch to ads, and non-subscribers said they were considering signing up. In the survey, 35% of current Disney+ subscribers and 24% of current Netflix subscribers said they anticipate switching their subscription tier when the new ad-supported options become available.

In tandem with the release of its ad-supported tier, Disney+ is also raising the price of its ad-free offering, from $7.99 to $10.99 per month. More than one in 10 Disney+ subscribers in the survey said they think they’ll drop the service entirely.

The ad-supported tiers are also drumming up interest among viewers who are not currently subscribers. In the survey, 22% of Disney+ non-subscribers said they think they’ll sign up for Disney+ once the new ad-supported tier is available. A similar 22% of Netflix non-subscribers said they anticipate signing up for Netflix service, including 15% who anticipate signing up for the ad-supported tier.

AVOD services offer the most “reasonable” ad-supported viewing experience and draw the most engagement with advertising, according to respondents. In the survey, subscribers to the ad-supported tiers of Discovery+ and HBO Max were the most likely to feel the number of ads they saw during a show they watched recently was “reasonable” — nearly three times higher than for Live TV on an MVPD.

Those two platforms were also at the top of the list when consumers were asked how much attention they paid to the ads they saw during a show. In the survey, 37% of Discovery+ and HBO Max viewers said they gave the ads their nearly “complete” attention.

Viewers who enjoy their overall viewing experience (including the ad load, break length, and other considerations) report paying attention to most of the ads more often than those who enjoyed their overall experience less.

Shorter ad breaks were the top characteristic that respondents said would make them more likely to pay attention to an ad, followed by rewards for watching, and shorter ad length and just a single ad in a break (tied).

Free, ad-supported streaming TV (FAST) services continue to gain users, and made-for-FAST original content is getting noticed, according to the survey. In Q4 2022, 65% of consumers said they use at least one FAST service such Pluto TV, the free version of Peacock, the Roku Channel, TubiTV, Freevee, etc. Usage continues to tick up over time, posting a 10-percentage-point gain over Q2 2021.

FAST services’ investment in original programming is starting to gain traction as 34% of current FAST users and 19% of non-users said they have heard of original shows or movies that were produced specifically for a free service. The most recalled FAST original titles were Roku Channel’s Weird: The Al Yankovic Story and Freevee’s “Leverage: Redemption.” In addition, 47% of current FAST users and 30% of non-users said they’d be more likely to use a FAST service if they heard it was producing original, exclusive content.

The Hub survey of 3,001 U.S. consumers aged 14-74 was conducted in November 2022 who watched at least 1 hour of TV per week.

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