At the end of the first quarter of this year, ad-supported plans made up one-in-four of all premium SVOD subscriptions. Moreover, ad-supported plans proved to be especially critical to acquisitions, as they account for nearly one-in-three new sign-ups, according to Antenna’s latest “State of Subscriptions: Adds and Ads” report.
While the viability of ad-supported plans is firmly established, the popularity varies significantly across services. To explain this, Antenna described how two-in-three subscribers signing up for Peacock in Q1 2023 chose the ad-supported plan, whereas fewer than one-in-five selected the ad-supported option for HBO Max and Netflix. Nonetheless, Disney+’s ad plan has been showing early traction since its December launch, with over one-in-three new subscribers selecting it.
To analyze the ways that consumers choose advertising in subscription video, Antenna has created four segments: “Ad Avoiders,” “Ad Takers,” “Ad Managers,” and “Ad Oblivious.” When given the choice on advertising, Ad Avoiders always choose ad-free plans, Ad Takers always choose the lowest-cost ad-supported plan, Ad Managers mix and match ad-supported and ad-free plans, and Ad Oblivious have not yet signed up for a service where they have had to make a choice about advertising.
Antenna noted that ad choice is largely a new phenomenon. Just three years ago, 64% US video streaming subscribers were Ad Oblivious: they had never signed up for a service which presented them with an ad-supported option. But that number is now down to 32%, given that just about 1 in 3 American subscribers were presented with an ad choice for the first time in the past three years.
Nevertheless, putting aside the aforementioned Ad Oblivious portion of the market and focusing on just on those two-thirds of subscribers who have actually made the choice, Antenna discovered that Ad Avoiders are the biggest segment at 42%, while 58% of Americans have chosen advertising either some or all of the time they are given the option.
Meanwhile, the Ad Manager portion, while still small, is rapidly growing. By definition, a consumer cannot be considered an Ad Manager until one has made the ad choice at least two times. In fact, when Antenna isolated only the consumers who have been faced with the ad choice two or more times, a fascinating story emerged: 71% of these Americans have chosen advertising at least once. And nearly one-in-two are Ad Managers. Consumers are not only learning to choose whether or not they want ads, they are also learning to make the decision on a service-by-service basis, Antenna assured.
● WHAT SPECIFIC FACTOR IS DRIVING SUBSCRIBERS’ AD CHOICE?
Antenna data suggests that across age, gender, ethnicity, and household income, there is virtually no demographic skew between the four ad choice segments. Therefore, according to Antenna, what is driving ad choice is the service itself. In fact, three-in-four Ad Managers who have subscribed to Peacock have chosen the ad-supported plan, and over half have chosen the ad-supported plan for Hulu. On the other end of the spectrum, only 19% of Ad Managers who have subscribed to HBO Max have chosen the ad-supported plan, and only 13% of Ad Managers who have signed up for Netflix since it launched its “Standard with Ads” plan in November 2022 have chosen that option.
“Many factors could be at play. Is it the type of content each service features? How well their ads are integrated into the experience? Ad loads? The difference in price between their ad-free and ad-supported options? Whatever the case, the advertising industry will spend the coming years understanding these drivers and tweaking their plan strategies accordingly,” the report says.
“In the big picture, however, this is a strikingly optimistic story for the advertising industry. Consumers clearly understand the value that advertising contributes to funding the production of the storytelling that they love. The Antenna data is clear: given the choice, most Americans choose advertising,” the report concluded.