So, Would Subscribers Switch to An Ad-Supported Netflix?

July 30, 2019

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Advertising Trends | Creative & Formats | Digital | Industries | Media & Entertainment | Video

Netflix reigns supreme when it comes to OTT services in the US, reaching three-quarters of American households as well as being considered the most indispensable TV network by many viewers. However, what would happen if Netflix went from being an ad-free service to having an ad-supported tier? New research from TDG has found that more than one-quarter (27% share) of subscribers would definitely not switch to a less expensive, ad-supported tier of Netflix if given the option, and that about half would be unlikely to.

While the largest share of the more than 1,200 Netflix users surveyed say they would stay with their current subscription tier if an ad-supported tier became available, one-fifth (20% share) of respondents appear to be on the fence about what they would do, saying they were neither likely nor unlikely to switch to a less expensive, ad-supported tier. On the other hand, 15% share of respondents say they are slightly likely to switch, but only 7% of all respondents believe they would definitely switch.

These figures are interesting at a time when Netflix announced to investors [pdf] that actual net subscriber growth for Q2 2019 (2.7 million) was almost half that as forecasted (5.0 million). If this slowdown continues, the platform may be looking at other means by which to drive revenue.

Additional data from Hub Entertainment Research finds that while 23% of Netflix subscribers would probably stop subscribing if Netflix included ads at their current subscription price, two-fifths (41%) say they would probably retain their subscription.

Not surprisingly, price is a deciding factor for most subscribers. Hub’s research found that, if given the incentive of paying a lower price for content with ads, the tipping point for subscribers seems to be at paying $3 less per month for ad-supported content, where 46% of respondents say they would take the ‘with ads’ option versus 44% who would remain with the ad-free version. This is compared to the 59% of subscribers sticking with ad-free if given the incentive to pay $1 less per month to see ads.

The same is true if the option were to pay more for an ad-free version of Netflix. If told they would pay $3 more per month for no ads (as opposed to paying their current subscription fee with ads) nearly 6 in 10 said they would opt for the ad-supported Netflix. More importantly, perhaps, if told they would pay $3 more for their current subscriptions to keep it ad-free, more than one-fifth (22%) say they would drop Netflix altogether.

About the Data: Findings from the TDG report are based on a survey of 1,292 Netflix subscribers while findings from the Hub Entertainment Research study are based on a survey of 1,765 US consumers with broadband who watch at least 1 hour of TV per week.

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