Which kind of ads consumers do tolerate on their streaming services?

A new Morning Consult survey shows that, while a cheaper tier of the service may not be enough to win over the majority of Netflix holdouts, it could entice a sizable percentage of them to finally sign up for the first time. But that is likely only if Netflix gets the advertising itself right, as consumers say they tolerate some ad formats much more than others.

Nearly two in five adults (39%) said they would be interested in signing up for a $10-per-month ad-supported streaming tier from a service that previously offered only a $15.50-per-month tier without ads. Netflix’s current base cost is $15.49 per month, and $10 is the rumored price for its upcoming ad-supported offering. HBO Max offers its ad-supported tier for $10 per month. The percentage of interested consumers climbs to 62% if the hypothetical service costs $7 per month. Hulu’s ad-supported plan costs $7 per month.

At the same time, Netflix subscribers were more likely than the general population to say they would be interested in an ad-supported service at both price points. Furthermore, half of frequent Netflix users (those who said they stream content on the service at least once per week) said they would be interested in switching from a more expensive ad-free plan to a cheaper ad-supported one, with prices unspecified.

●  CONSUMERS HATE NORMAL ADS BUT TOLERATE OTHER KINDS

Respondents had the lowest opinion of standard ads that interrupt content, with 67% saying they have either a “somewhat” or “very” unfavorable view of those ads. At the same time, ads that run before content (or pre-roll ads), that typically allow users to watch the rest ad-free, were the most favored by survey respondents. In fact, 56% of adults had a favorable view of pre-roll ads compared to 27% with an unfavorable view.

Respondents also had a net positive view of “pause ads,” or ads that only play when a user pauses their TV series of film, which are increasingly being deployed by streaming services as a way to include ads without disrupting the viewing experience.

The survey was conducted May 26-28, 2022, among a representative sample of 2.210 US adults, including 1.352 self-identified Netflix subscribers, with unweighted margins of error of plus or minus 2 percentage points and 3 percentage points, respectively. The sample also included 1.127 frequent Netflix users, with an unweighted margin of error of plus or minus 3 percentage points.