When streaming services began to proliferate, it was thought that the age of ad-supported television was coming to an end. Services like Netflix brought something new to the table: the binge watch. Instead of waiting for new episodes to drop or slogging through banks of tedious commercials, people could blaze through whole seasons of their favorite shows in a single sitting.
Streaming services have come nearly full circle from those days. With the market now nearly saturated, competition for consumer attention has never been higher; everyone is looking to find an edge in the marketplace, with new tentpole content or updated user interfaces.
One edge that many streaming services are taking advantage of is tiered pricing options. Free, ad-supported streaming TV (FAST) channels are the fastest growing platform category according to Hub Research. Though most of the premium streaming giants don’t offer a free tier, many have, or are in the process of creating, ad-based tiers at a lower price point.
The intersection of content and value is one of the key factors in whether a subscriber chooses to sign up for a service or not these days. When asked by Hub what caused consumers to sign up for an ad-free service, 42% cited value while 41% mentioned variety. Only 36% of respondents mentioned that the ads themselves were the determining factor. However, 56% of streamers would rather save money than avoid ads if given the choice, and as services continue to offer ad-supported content, that number will likely only grow.
Netflix recently announced their plan to introduce an ad-supported tier in 2023, and Disney+ has such plans in the works as well. Estimates project that the companies could each see over $1 billion in excess revenue from the change by combining increased signups from more cost-conscious consumers with traditional advertising revenue.
It may be surprising that streaming customers are willing to return to a viewing experience in which they are forced to put up with ads again, but there are several factors driving the growth of ad-supported platforms. Inflation has reached high levels, but stacking might be an even bigger driver. The average U.S. streaming customer subscribes to five services, a number that continues to grow. Ad-supported tiers are an excellent way to keep a consumer’s costs down while ensuring that they continue to stack, rather than churn through services to find the best value.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”