Report: Viewers Twice as Likely to Subscribe to Services with Multiple Tiers; Disney+ Could Lose 10% of Customers

This past year will likely not be one remembered fondly by most media companies, but that is not likely true for operators of ad-supported streaming services. According to a new report from entertainment research company Hub, ad-supported streaming has gained steady support, with 57% of TV watchers now reporting they’d rather save $4-$5 monthly and watch content with limited ads than pay more to go ad-free.

The report also offered good news for services like Netflix and Disney+. Both services now offer ad-supported streaming tiers to go along with their ad-free offerings, and that’s the kind of choice that customers are craving.

When asked to choose between three hypothetical TV services, viewers who were given the option to choose a platform with tiered service do so nearly twice as often as those shown a platform that only offers “limited ads.”

That data falls in line with a survey from Samsung Ads released earlier in December that showed multi-tiered platforms — also known as hybrid video-on-demand (HVOD) services — are the streaming type most likely to retain customers once they’re signed up, thanks to their ability to fit multiple budgets and the ease of moving between subscription options as circumstances change.

Another set of data from Hub’s new survey held news that was decidedly more mixed for Disney+. The research shows that after the Dec. 8 launch of the service’s ad-supported Disney+ Basic, 11% of its current subscribers would consider leaving the service. That potential churn rate is largely due to the price increase that the ad-free tier saw, rising from $7.99 to $10.99 per month.

By contrast, only 6% of Netflix users said that they were considering canceling, and 74% said they would likely stay ad-free. This is likely attributable not only to the lack of an accompanying price increase for Netflix’s ad-free tiers, but also to the fact that some Netflix content is not available on the service’s Basic with Ads plan, thanks to ongoing negotiations with some studios regarding allocation of ad revenues.

There was better news for Disney+ in Hub’s survey in regard to new customers; according to respondents, 22% of Disney+ non-subscribers think they’ll sign up for Disney+ now that Disney+ Basic is available. A similar 22% of Netflix non-subscribers are considering adding that service, including 15% who anticipate signing up for the ad-supported tier.

Hub’s survey also offered future guidance to any service considering launching an ad tier; to keep ad loads low. The data showed that discovery+ and HBO Max, which offer around four minutes of ads per hour of content, lead all streamers in terms of customer satisfaction regarding the frequency of commercials. Disney+ and Netflix also show around three to five minutes of ads per hour of content.

Finally, the new research from Hub offers helpful insights into providers of free ad-supported TV (FAST) streaming. Much like subscription video-on-demand (SVOD) services, original content is key for FAST platforms to stand out in an increasingly crowded market. According to Hub, 7% of current FAST users and 30% of non-users say they’d be more likely to use a FAST service if they heard it was producing original, exclusive content.

“The industry seems to have finally solved the mystery of how to get consumers to accept ads in TV—and it was as simple as offering a less onerous ad experience and paired with a price break to boot.” Hub’s Peter Fondulas said. “Now that Netflix and Disney+ have jumped on the ad-supported bandwagon, the question is whether and when the remaining ad-free only holdouts will join in.”