Survey: Few Demographic, Income Differences Between Ad-Free, Ad-Supported Customers; What Does it Mean for Netflix?
What causes customers to choose whether or not to watch ads with their streaming service? Is it more to do with factors of price and content library, or do demographics play a major part in the decision? Media research firm Antenna has conducted a new study that seeks to answer those questions and more.
Antenna’s survey found that the demographics of subscribers to ad-free plans are extremely similar to those who sign up for ad-supported plans. Surprisingly, income level made almost no difference when customers chose between subscription options on the five subscription video-on-demand (SVOD) services that offer ad-supported tiers. Respondents who said they made less than $50,000 per year were only 2% more likely to subscribe to an ad-supported plan.
Ad-supported subscribers also tend to skew slightly more female, suggesting that women are somewhat more willing to exchange ads for a lower price point. But the income numbers suggest that while income is a factor, it is not the overriding decider on which plan customers decide to sign up for.
Antenna’s research also indicated that age and ethnicity are not big factors in that determination either. The ethnic makeup of ad-free and ad-supported users is practically identical. Budget-conscious seniors are more likely to be ad-supported users, but only at a rate of 2%, in line with the larger economic breakdown.
The numbers from Antenna mean that companies like Netflix, which is launching its ad-supported plan on Nov. 3, will have to go beyond demographics to discover why customers make the choices they do and then cater their offerings to consumers’ specific needs.
Those needs likely start with value, meaning not just price, but the service that customers get for their money. Netflix’s new ad-supported plan will offer much less in terms of features than its premium tiers. For example, it will only allow for one stream at a time, and will not offer the ability to download shows for offline viewing.
These decisions were, in part, likely put in place to help Netflix avoid cannibalizing its existing subscriber base. Customers of the streaming giant’s Basic tier without ads could decide that they’d rather pay $9.99 per month for the ability to download and watch without ads instead of the ad-supported $6.99. Additionally, 92% of non-Netflix users watch ad-supported TV on other platforms, which means that they constitute a pool from which Netflix can take new subscribers who are used to streaming with ads.
Just how many of these new subscribers will be lured to Netflix remains to be seen, but Antenna’s research is a helpful starting point for the company’s executives. The survey demonstrates clearly that ad-supported and ad-free customers are extremely similar from a demographic standpoint, and that streamers need to look at other factors to determine what will make their various subscription tiers successful.
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