Hub Research: Ad-Supported Tiers Gaining Traction

More than half of U.S. consumers would prefer to watch ads and pay between $4 and $5 less each month for a streaming service, according to new data from Hub.

Per Hub’s Q4 TV Advertising: Fact vs. Fiction study, 57 percent of consumers would prefer a less-expensive ad-supported tier on a streaming service. Further, given the choice, more consumers would choose a platform that offers both ad-free and ad-supported tiers.

Hub also found that 35 percent of current Disney+ subscribers expect to switch to the cheaper ad-supported tier, as do 24 percent of Netflix members. More than 1 in 10 Disney+ subs think they’ll drop the service entirely given the recent rate hike. The ad-supported tier is also attractive to new subs: 22 percent of non-Disney+ customers think they’ll sign up for it. About 15 percent of non-Netflix customers are mulling that service’s ad-supported tier.

FAST platforms are also gaining traction. Per the Hub study, 65 percent of consumers are using at least one FAST platform, up from 57 percent in the same period last year. Of existing FAST customers, 34 percent have heard of these platforms’ originals, notably The Roku Channel’s Weird: The Al Yankovic Story and Freevee’s Leverage: Redemption. Hub also found that 47 percent of current FAST users and 30 percent 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. “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.”