In a context where FAST services are growing faster than any other category, Netflix’s growth has stalled, and by the end of the year all major streamers (including Netflix) will offer an ad-supported tier, Hub Intel analyzed three reasons why viewers may be more excited about this than many pundits expect.
First of all, tolerance for ads is higher than many people think. In general, more viewers use at least one ad-supported TV source, including cable or broadcast (95%), than ad-free (79%). At the same time, more than half of viewers say they would choose a platform with ads if it saved them as little as US$4 or US$5 per month. Even among those who described themselves as “intolerant” of ads, 30% said they would choose an ad-supported platform if it saved money.
Furthermore, avoiding ads is no longer a primary driver of how people watch. When Hub asked people who recently signed up for an ad free platform why they subscribed, 36% mentioned lack of ads. But more mentioned exclusive shows (41%), library selection (38%) and value for the money (42%). Taken overall, content is the most important variable, and today the shows on ad-supported platforms are just as desirable as what’s available on their more expensive ad-free siblings.
Moreover, CTV advertising offers a fundamentally different experience. People who say “I can’t stand ads” are often thinking about “old school” linear TV. But ads on streaming platforms are a different proposition: lower ad loads, fewer breaks, and (in theory) ads for products more relevant to the viewer. Viewers who watched ad-supported shows on streaming platforms are much more likely to say the ad load was “reasonable” and are also more likely to say they enjoyed the show they watched.
"Several stars have aligned to spur growth of ad-supported streaming platforms. The obvious benefit is that they cost less. But the ad experience on connected TVs is much better than regular TV. Most important, there’s no compromise on content: tiered subscriptions make the same content available with or without ads. As viewers feel the bite of inflation, many will consider paying less (or even nothing) for good content a no-brainer,” commented Jon Giegengack, Founder and Principal at Hub.