Tiered ad options broaden streaming appeal in crowded market

The data from Hub’s annual Monetization of Video study – fielded in June 2021 among 1,607 US TV viewers age 16-74 – suggested that tiered platforms, where viewers can choose between a paid, ad-free option and a less expensive (or free), ad-supported option, appealed to the largest cross-section of viewers.
In its survey, Hub divided respondents into two groups. Each group was asked to choose from three hypothetical streaming services with identical content. One of the stand out features of the study was that when tiered services were an option, no other choice gained greater share.

Group one chose from a paid, ad-free subscription, a free-with-ads service, and a paid, limited-ads subscription, that is fewer ads than people would see on regular live TV. Group two chose from the same options, except the limited-ads service was replaced with a paid service offering two tiers to choose from: ad-free and ad-supported.

Almost twice as many consumers chose the service with tiered options (36%) as the service with a limited-ad option only (19%). The limited ads-only service got a much lower share than either the paid ad-free service or the free-with-ads service. On the other hand, the proportion choosing the tiered service was just as high as the proportion choosing free-with-ads, and higher than the proportion choosing the service with only a single, ad-free option.

The research also found that while tiered plans may cannibalise paid subscriptions, they also attracted what was found to be a sizable number of non-subscribers. In a question asked before the ad-supported tier of HBO Max launched last month, almost 40% of current HBO Max subs said they’d consider switching to the ad-supported tier. But more than a quarter of those who didn’t subscribe to HBO Max said they’d consider signing up with a less expensive ad-supported tier as an option.

“It’s true that some TV viewers will do almost anything, including paying a premium, to avoid ads. But there are many who will choose ad-supported TV if it saves money or lets them watch a show they can’t watch somewhere else”, said Jon Giegengack, one of the Monetization of Video study’s authors. “Tiered plans give viewers control of their experience. Whether they watch with ads or not, everyone is getting an experience they chose, and not one chosen for them.” Rapid TV News