A recent study conducted by research firm Parks Associates has unveiled a significant trend in the streaming landscape. The study, titled "Ad-Based Streaming: Consumer Demand & Engagement," revealed that an impressive 57% of users on eight major streaming platforms, including prominent players like Netflix, Hulu, and Disney+, have opted for ad-supported plans. This shift can be attributed to consumers actively seeking ways to manage escalating subscription costs.
The study, which involved surveying 8,000 U.S. households, uncovered a clear pattern: rising prices for premium ad-free plans are prompting many users to switch to more budget-friendly ad-supported alternatives. Parks Associates highlights that platforms such as Netflix, Disney+, and Amazon Prime Video have recognized this consumer demand and have proactively introduced these lower-cost tiers, aligning with their need to enhance profitability.
"Many video streaming services, driven by the necessity to boost profits, are continually increasing prices and have introduced ad-supported plans to provide subscribers with options," commented Sarah Lee, a research analyst at Parks Associates. "In many instances, these ad-based tiers prove to be more profitable for businesses, emphasizing the urgency to refine the ad experience for their subscribers."
Beyond the allure of cost savings, Parks Associates discovered that promotions and bundles also play a pivotal role in attracting subscribers to ad-supported tiers. Roughly one-quarter of respondents indicated that special deals influenced their decision to adopt these plans, while others viewed them as a low-risk avenue to explore or re-subscribe to services they had previously abandoned.
Despite this growing trend, the user experience with ad-supported tiers leaves room for improvement. Numerous users voice their discontent regarding frequent ad interruptions, repetitive commercials, and instances where the content comes to a halt but no ads are displayed. Lee emphasized that these factors could pose a threat to subscriber retention, potentially jeopardizing the ad revenue that streaming platforms rely on.
"As services continue to raise prices and viewers migrate to ad-supported tiers out of necessity, it becomes crucial for services to enhance the ad-based experience or risk losing subscribers," Lee added.
The findings of this study will serve as a key topic of discussion at Parks Associates' upcoming Future of Video: Business of Streaming conference, scheduled for November 19-21 in Marina del Rey, California. Industry leaders will convene to delve into the future of streaming, strategize on delivering high-quality services, and explore effective methods for retaining and attracting subscribers in a fiercely competitive market.