Analysis: HBO Max’s Ad-Supported Success Should Provide Netflix, Disney+ Roadmap for Future Plans

Ad-supported streaming is definitely here to stay. That’s what the numbers point to in a new survey released by Antenna, which tracks and quantifies streaming habits. Antenna dove deep into HBO Max and its two pricing tiers as a way to analyze what their numbers mean for other streaming services just now adding an ad-supported tier to their premium subscription service.

HBO Max launched its cheaper, ad-supported tier in June of 2021. At the time of launch, only 1% of U.S. subscribers signed up for the new tier. That number has grown steadily over the last year, to the point that now 12% of subscribers — 1.9 million customers — are now signed up for the streamer’s ad-supported tier.

New customers are making up an increasing proportion of ad-supported subscribers, as well. At least 25% of newly subscribed customers have been choosing the ad-supported tier of HBO Max during every month of 2022.

Customers are not only supportive of ads with their HBO Max subscription, they are generally satisfied with the results. Reportedly 92% of HBO Max customers are happy with the ad-supported tier, the highest percentage of any ad-supported premium subscription service.

Ad-supported tiers of Hulu, Peacock, discovery+, and Paramount+ all enjoy high rates of support from their subscription base as well, but fall behind HBO Max’s approval rating thanks to its limited ad time per hour and variety of commercials. Additionally, more customers are likely to join an ad-supported tier as first-time subscribers than downgrade from an ad-free tier; so both Netflix and Disney stand to gain a bigger influx of subscribers to their ad-supported tiers than current customers who migrate over at launch.

This information comes at an auspicious moment for both Disney+ and Netflix, as both companies are in the process of setting up ad-supported tiers. The streamers stand to reap over $1 billion apiece in extra revenue by introducing subscription options supported by ads.

One lesson that both services would be wise to take from HBO Max’s success is the number and frequency of ads. HBO Max attaches only four minutes of ads per hour to its content, and does not include ads on any HBO original programming. Disney owns the Disney+ library already, so this limited ads strategy will be easier to pull off. Netflix, on the other hand, is still negotiating with studios over who will get what in terms of ad revenues, but the writing is clearly on the wall: more streaming services will be adopting ad-supported tiers, and soon.