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Report: 92% of Non-Netflix Subscribers Watch Ad-Supported Streaming; Could See Big Subscriber Increase

David Satin

The chatter regarding Netflix’s planned launch of an ad-supported tier has been difficult to avoid. Speculation on everything from the price that Netflix is planning to charge advertisers to the launch date of the tier itself has been rampant. One area particularly suited for speculation is who exactly will be signing up for the new subscription option once Netflix does launch it.

Given that Netflix had around 220 million subscribers in Q2 of 2022, concerns have been raised about Netflix simply cannibalizing its current subscriber base to get viewers for its ad-supported tier. However, Netflix itself projects that it will add 40 million “unique” viewers by the third quarter of 2023.

New data released by research company Samba TV, working in conjunction with polling firm Harris X, suggests that Netflix won’t have to worry as much about cannibalizing its own audience. Although the numbers state that 46% of Netflix subscribers would consider the switch to an ad-supported tier, they also show that 92% of non-Netflix subscribers are already using an ad-supported streaming service. That means that there’s a robust market of non-Netflix customers who are accustomed to ads while streaming, and a lower price point may convince them that Netflix is worthwhile.

“The exciting value proposition from Netflix’s upcoming ad model lies in the possibility it offers to bring in net new or lapsed subscribers,” Samba CEO and co-founder Ashwin Navin said. “Nine out of 10 adults who do not currently have a Netflix subscription watch other ad-supported content today, indicating these audiences have no aversion to watching ads in exchange for free or reduced price content and are prime candidates to turn to Netflix’s new ad-supporter tier.”

The data from Samba and Harris also shows which demographics are more likely to use the ad-supported tier when Netflix makes it available. The survey showed that 52% of Baby Boomers and 48% of Gen Xers would switch over, whereas only 38% of Gen Zers would be interested in switching. That suggests that older viewers who are more accustomed to watching TV with ads via traditional broadcast and cable TV would rather switch and save, compared to younger viewers who have grown up in the era of ad-free streaming.

Finally, the report offered some interesting insight as to how many ads customers think are reasonable for Netflix’s new tier. Forty-five percent of Netflix users state they would consider switching to a tier that was discounted by half of what they currently pay in exchange for having to watch fewer than five minutes of ads per hour. That number drops to less than 33% if the ad load is increased to 10 min per hour, even if the tier itself becomes free.

The new data from Samba underscores just how closely the industry is monitoring Netflix’s launch of its ad-supported tier. Ad-supported Netflix is expected to generate $5.5 billion in revenue for the company by 2027, so streamers without ad-supported tiers will be watching with extra vigilance, and if Netflix is successful, ad-supported streaming tiers will likely become even more ubiquitous than they are now.

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