Streaming viewers willing to watch more ads to pay less, study finds

The launch of ad-supported tiers by Netflix and Disney+ signifies a major shift in the streaming landscape, but new research indicates ads are not going anywhere as viewers overwhelmingly demand lower-cost streaming options.

Hub Entertainment Research’s “TV Advertising: Fact vs. Fiction” study of over 3,000 television viewers found 59% would rather watch ads to save $4 to $5 per month compared to paying more to go ad-free. This sentiment has held steady across Hub’s earlier studies.

“Wave after wave, 3 in 5 consumers tell us they would rather watch ads if it means saving $4-$5 a month,” the study notes.

The findings suggest ad-supported streaming still has room to run despite high-profile moves by Netflix and Disney+ to add pricier ad-free tiers in late 2022. Other services like Max and Apple TV+ are rumored to be considering similar tiered offerings as they look to add new subscribers.

Far from spelling the demise of ad-supported video, the research indicates viewers strongly prefer having options and will toggle between ad-supported and ad-free tiers to balance cost and experience. Almost 40% preferred a service with clear ad-free and ad-supported tiers compared to just 22% who favored a single “limited ads” option.

“Viewers like choices, and a tiered service that lets them easily switch is preferred over a platform with just one ‘limited ads’ option,” the study found.

Among viewers who’ve had the option, more than one in four reported switching tiers on a service. The switching goes both ways, with some moving to ad-free plans and others opting back into ads to save money.

The main reasons given for switching tiers were ad avoidance on one hand and cost savings on the other.

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These findings suggest that while some viewers will pay up for an ad-free experience, especially on services with prestige content, most are perfectly willing to watch ads in exchange for lower prices. Rather than cleanly dividing into ad-free and ad-supported camps, viewers treat it as a spectrum where they can optimize cost versus ads.

New data also indicate viewers have been pleased with the ad experience on the major streaming platforms that have added supported tiers. Thirty-three percent of Disney+ subscribers said ads were “a lot better” than on other ad-supported services, along with 32% of HBO Max viewers and 27% of Netflix users.

This suggests the streaming giants outperform traditional TV and vMVPDs, where only 4-16% felt the ad experience was superior.

Streaming services must still walk a fine line on ad load and length, however. Viewers naturally pay less attention when they feel bombarded.

The Hub study found engagement dropped when ad frequency exceeded 11 per half-hour show or lengths stretched past 90 seconds. The takeaway is that “the longer and more frequent the ads, the less attention they earn.”

While no one likes ads, most viewers accept them as the price of cheap or free content.