In the U.S., a steady trend has started to be seen of consumers moving away from exclusively watching ad-free streaming, and toward using only ad-supported, according to Hub TV’s Churn Tracker. The company explained that, in the first quarter of 2024, the amount of users who subscribed to only ad-supported services increased by more than 100%, moving from 8% of the total users to 18%.
The largest segment of viewers, those who watch both ad-supported and ad-free streaming, is significantly more likely to add and cancel services in a given month. Among those who added or canceled, nearly 50% added and 4 in 10 canceled multiple subscriptions. Those are pretty staggering numbers for streaming providers who are fighting for market share.
Many viewers add a service to watch something specific, and then cancel when they’re done with it. Consumers in the more upscale viewer groups who use ad-free (48%) and both ad-free and ad-supported (45%) are even more likely than ad-supported-only viewers (36%) to cite specific content as their reason for subscribing. It's the same story for those who cancel a service, with 29% of the “both” group citing a lack of content, compared to 26% among ad-free viewers, and 22% of ad-only viewers.
Currently the largest group of subscribers to the major streamers are watching a combination of ad-free and ad-supported streaming services, and the smallest segment of viewers watch ad-supported only. Thus far, the ads-only group has grown as the group watching ad-free has shrunk. And there is reason to believe this dynamic will accelerate. As prices rise, more ad-free subscribers are likely to decide it is worth accepting advertising to save on a subscription. Combined with more consumers becoming aware of the lower cost ad-supported options, tier switching should gain momentum among the ad-free viewers.
With Amazon Prime Video migrating its viewers to a default ad-supported tier in February, the group of ad-free only viewers has already declined in the near term. More than 80% of Amazon Prime Video subscribers did not opt into the higher cost no-ads tier and that has had an impact on the entire ecosystem. Longer term, other services like Netflix and Disney+ have made their intentions clear regarding price increases for their premium ad-free tiers. With all of the Big 5 SVODs (Netflix, Hulu, Disney+, Max, and Amazon Prime Video) now offering lower-cost, ad-supported plans, the number of viewers who watch strictly ad-free content is trending toward being quite small.