Ad-supported streaming plans now make up majority of subscriptions

A new study from research firm Parks Associates reveals that 57% of users on the eight major streaming platforms—including Netflix, Hulu, and Disney+—now subscribe to ad-supported plans, as consumers look for ways to manage rising subscription costs.

The study, “Ad-Based Streaming: Consumer Demand & Engagement,” surveyed 8,000 U.S. households, finding that price increases for premium ad-free plans are driving many to switch to cheaper, ad-supported options. According to Parks Associates, platforms such as Netflix, Disney+, and Amazon Prime Video have rolled out these lower-cost tiers in response to consumer demand and the need to boost profitability.

“Many video streaming services, needing to boost profits, continue to raise prices and have rolled out ad-supported plans to give subscribers options,” said Sarah Lee, a research analyst at Parks Associates. “In many cases, these ad-based tiers are more profitable for businesses, adding urgency to the need to improve the ad experience for their subscribers.”

Beyond cost savings, Parks Associates found that promotions and bundles also entice subscribers to ad-based tiers. Approximately one-fourth of respondents mentioned that deals helped them decide to adopt these plans, while others saw it as a low-risk way to explore or re-subscribe to a service they previously abandoned.

Despite this trend, the user experience with ad-supported tiers leaves room for improvement. Many users complain about frequent ad interruptions, repetitive commercials, and instances where the content halts but no ads play. Lee noted that these factors could threaten subscriber retention and, consequently, the ad revenue that streaming platforms rely on.

“As services continue to raise prices and viewers shift to ad-supported tiers out of necessity, it is critical that services improve the ad-based experience or risk losing subscribers,” Lee added.

The findings will be a key topic at Parks Associates’ upcoming Future of Video: Business of Streaming conference, set for Nov. 19-21 in Marina del Rey, Calif. Industry leaders will gather to discuss the future of streaming, strategies for delivering high-quality services, and how to retain and attract subscribers in an increasingly competitive market.

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