5 JAN 2024

Preference for ad-supported streaming continues to rise

The latest 2023 results of Hub’s semi-annual “TV Advertising: Fact vs. Fiction” survey clearly show the trend of consumers opting for ads is not abating.

5 JAN 2024

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As streaming video services have raised subscription prices and rolled out lower-cost ad-supported tiers, more consumers are expressing their preference for watching ads to save money. The latest 2023 results of Hub’s semi-annual “TV Advertising: Fact vs. Fiction” survey clearly show the trend of consumers opting for ads is not abating.

According to the report, most viewers will choose lower cost subscriptions with ads over ad-free streaming. In fact, nearly two-thirds of consumers say they would choose an ad-supported option if it saves them US$4-5 per month on a video subscription. That figure is significantly higher than just six months ago.

Furthermore, over the past year, more consumers who call themselves intolerant toward ads are saying they would in fact opt for an ad-supported service to save money.

However, consumers’ tolerance for advertising is not unlimited: all things being equal, nearly four in ten viewers would choose a streaming service over another if it had a lighter ad load.

At the same time, the report revealed that almost half of consumers pay more attention when the breaks are shorter. Moreover, when a streaming service has a more reasonable ad load, its advertisers are seen as higher quality.

Hub believes that two standard length ads per break is a reasonable amount of advertising. Most viewers consider ad breaks reasonable if they are one minute or shorter. Ninety seconds is the tipping point where most viewers no longer consider a break reasonable.

The investigation notes that there is still considerable opportunity for streamers to grow their ad-supported tiers, as the majority of consumers are unaware of the lower-cost ad-supported options offered by most streaming services.

Over the past two years, the Hub “TV Advertising: Fact vs. Fiction” survey has consistently shown that a majority of viewers prefer an ad-supported video subscription if it costs less than ad-free. And in the latest wave, that proportion is significantly higher than it was as recently as June of 2023.

Not only is there widespread acceptance of advertising in streaming video, there is still opportunity to sign up new subscribers. Most consumers are not aware that services like Netflix, Disney+, and Max have introduced lower cost ad-supported tiers. Aggressive marketing of the less expensive options can attract viewers who have not yet subscribed to a service because of perceived high cost, the report said.

For advertisers, streaming video currently provides a better environment for their messages than traditional linear TV. The lower ad loads on most services are generally within the boundaries of what viewers consider reasonable. As a result, they are paying more attention to the ads, and thinking more positively about the brands.

“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. And as long as providers stick to reasonable ad loads, it is a win for them and their advertisers as well,”  said Mark Loughney, Senior Consultant to Hub.