Consumers increasingly opt for ad-supported streaming to offset subscription expenses

In a shift indicative of changing consumer preferences in the streaming landscape, more viewers are opting for ad-supported streaming services as a cost-saving measure. This trend emerges in Hub Research’s latest “TV Advertising: Fact vs. Fiction” survey, conducted in November 2023.

As subscription prices for streaming video services rise and more platforms introduce lower-cost ad-supported tiers, nearly two-thirds of consumers expressed a willingness to accept ads if it saves them $4-5 per month on their subscription. This preference significantly increased from just six months ago, highlighting a growing inclination towards ad-supported options over ad-free streaming.

Interestingly, the survey also points to a softening of resistance towards advertisements.

Consumers who previously identified as intolerant of ads are now more open to ad-supported services as a budget-friendly alternative. However, this tolerance is not without limits. Close to 40% of viewers preferred streaming services with fewer ads, suggesting that ad load is a crucial factor in their choice of service.

The survey findings also highlight the importance of ad load in maintaining viewer engagement. Most viewers consider ad breaks of one minute or shorter to be reasonable, with ninety seconds being the threshold beyond which ad breaks are deemed excessive. This insight is particularly relevant for advertisers, as shorter ad breaks not only retain viewer attention but also enhance perceptions of the advertised brands’ quality.

Despite the growing acceptance of ad-supported streaming, the survey reveals that many consumers are still unaware of these lower-cost options offered by major streaming services like Netflix, Disney+, and Max. This presents a significant opportunity for streaming platforms to attract new subscribers, especially those hesitant due to perceived high costs.

From an advertising perspective, streaming video offers a more favorable environment compared to traditional linear TV. The generally lower ad loads align with what viewers consider acceptable, leading to greater attention and more positive attitudes towards the advertised brands.

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Mark Loughney, a senior consultant to Hub, encapsulates the situation, stating, “As consumers begin to get hit with the double whammy of needing multiple subscriptions to get their entertainment, coupled with significant price increases, opting in for advertising becomes more appealing to them.”

He further adds that maintaining reasonable ad loads is beneficial for both streaming providers and their advertisers.

These findings from Hub’s survey reflect a significant shift in the media consumption landscape, where cost considerations are increasingly driving viewer preferences towards ad-supported streaming options.