Ad-supported TV 'here to stay'
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Joseph O'Halloran
| 20 December 2022
Just as Netflix and Disney+ launch new ad-supported tiers and as inflation continues to hit wallets, free and lower-cost video options are multiplying and gaining users, meaning ad-supported TV is here to stay says Hub Entertainment Research.
HUb Ent Res ad tier 20Dec2022
The analyst’s Q4 2022 wave of TV Advertising: Fact vs. Fiction study was conducted among 3,001 US consumers age 14-74, who watch at least 1 hour of TV per week. The data was collected in November 2022.

The research pointed out that fundamentally viewers were continuing to embrace the ad-supported viewing model as more platforms add service tiers with ads and most TV consumers would rather watch ads if it means saving money. Almost three in five of the survey sample said they’d rather watch ads and pay $4-$5 less per month for a streaming service. Preference for less expensive, ad-supported tiers over more expensive, ad-free tiers remained relatively stable over the past year.

Given the choice, more consumers said they would opt for a platform that offered them the option of both ad-free and ad-supported tiers. When asked to choose between three hypothetical TV services, viewers who are given the option to choose a platform with tiered service – some with ads, some without – do so nearly twice as often as those shown a platform that only offered limited ads.

Free, ad-supported TV streaming services (FASTs) were found to be gaining users and made-for-FAST original content is getting noticed. Almost two-thirds of consumers said they use at least one FAST such Pluto TV, the free version of Peacock, the Roku Channel, TubiTV and Freevee, etc. Usage continued to tick up over time, posting a 10-percentage-point gain over Q2 2021.

And with the SVOD big-two recently getting their AVOD games on, 35% of current Disney+ subscribers and 24% of current Netflix subscribers anticipated switching their subscription tier when the new ad-supported options become available. Such offers were also gaining interest among viewers who are not currently subscribers. 22% of Disney+ non-subscribers think they’ll sign up for Disney+ once the new ad-supported tier is available. A similar 22% of Netflix non-subscribers anticipate signing up for Netflix service, including 15% who anticipate signing up for the ad-supported tier.

Subscribers to the ad-supported tiers of Discovery+ and HBO Max were also the most likely to feel the number of ads they saw during a show they watched recently was “reasonable” – nearly three times higher than for Live TV on an MVPD.

FAST services’ investment in original programming was starting to gain traction. 34% of current FAST users and 19% of non-users say they have heard of original shows or movies that were produced specifically for a free service. Hub predicted the increased availability of original content on FAST platforms may continue to fuel user growth in this sector. 47% 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.” said Peter Fondulas, principal at Hub Entertainment Research “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.”