TIERED ADVERTISING PLATFORMS APPEAL TO MOST VIEWERS

As the cost of stacking multiple streaming subscriptions rises, free-ad-supported TV (FAST) platforms are gaining users. But data from Hub’s annual “Monetization of Video” study suggests that tiered platforms – where viewers can choose between a paid, ad-free option and a less expensive (or free), ad-supported option – appeal to the largest cross-section of viewers.

According to Hub, when tiered services are an option, no other choice gets greater share. In its survey, the researcher divided respondents into two groups: each group was asked to choose from three hypothetical streaming services with identical content. Group one chose from a paid, ad-free subscription, a free-with-ads service, and a paid, limited-ads subscription; while group two chose from the same options, except the limited-ads service was replaced with a paid service offering two tiers to choose from: ad-free and ad-supported.

Almost twice as many consumers chose the service with tiered options (36%) as the service with a limited-ad option only (19%). The limited ads-only service got a much lower share than either the paid ad-free service or the free-with-ads service. On the other hand, the proportion choosing the tiered service was just as high as the proportion choosing free-with-ads, and higher than the proportion choosing the service with only a single, ad-free option.

At the same time, the study revealed that tiered plans may cannibalize paid subscriptions, but they also attract a sizable number of non-subscribers. In a question asked before the ad-supported tier of HBO Max launched last month, almost 40% of current HBO Max subs said they would consider switching to the ad-supported tier. But more than a quarter of those who do not subscribe to HBO Max said they would consider signing up with a less expensive ad-supported tier as an option.

“It’s true that some TV viewers will do almost anything, including paying a premium, to avoid ads. But there are many who will choose ad-supported TV if it saves money or lets them watch a show they can’t watch somewhere else. Tiered plans give viewers control of their experience.  Whether they watch with ads or not, everyone is getting an experience they chose, and not one chosen for them,”  said Jon Giegengack, Principal at Hub Entertainment Research and one of the authors of the study.