Insight of the Day: Consumers continue to cozy up to ad-supported streaming as prices rise

Detailed Findings

1. Growth in Ad-Supported Plans:

   • As of Q3 2024, 43% of all streaming subscriptions are ad-supported.

   • 56% of gross additions in the same quarter were for ad-supported plans, a significant increase from previous years.

   • Gross additions for ad-supported plans grew 48.9% YoY, while ad-free plans declined 13.6% YoY.

2. Key Platform Data:

   • Peacock: Leads with 78% of new customers opting for its ad-supported tier.

   • Hulu and Disney+: Attract 63% and 62% of new subscribers to ad-supported plans, respectively.

   • Netflix: Ad-tier subscribers increased from 28% in Q3 2023 to 44% in Q3 2024.

3. Market Trends:

   • Since Q4 2023, over 50% of gross streaming subscriptions each quarter have been ad-supported.

   • The shift correlates with the launch of ad tiers on major platforms like Netflix, Disney+, and Prime Video.

Reasons for Success

1. Affordability:

   • Rising subscription costs push consumers toward ad-supported options as a cost-effective alternative.

2. Platform Monetization:

   • Ad tiers increase average revenue per user (ARPU) by combining subscription fees with ad revenue.

3. Wide Availability:

   • Almost all major streamers now offer ad tiers, creating broader consumer acceptance and normalization.

Trend Reflected in the Article

• The normalization of ad-supported streaming marks a departure from early streaming’s ad-free promise. Consumers now prioritize affordability over uninterrupted viewing.

Consumer Motivation

1. Cost Sensitivity:

   • The escalating cost of ad-free subscriptions makes ad-supported tiers more appealing.

2. Content Access:

   • Ad-supported plans still provide access to desired content at a lower price.

3. Bundling Benefits:

   • Services like the Disney Bundle encourage multi-service subscriptions with affordable ad-tier options.

Big Social Drive Reflected by Trend

• Economic Consciousness:

  • Rising living costs and inflation are driving consumers to make budget-friendly choices, even if it means tolerating ads.

Big Social Trend

• Acceptance of Ads for Value:

  • The widespread adoption of ad-supported plans reflects a societal shift toward balancing cost and value, as consumers adapt to economic pressures and evolving media consumption habits.

Strategy to Follow by Brands

1. Targeted Advertising:

   • Utilize the precise audience targeting capabilities of streaming platforms to maximize ad effectiveness.

2. Creative Engagement:

   • Invest in compelling, entertaining, and interactive ads to ensure they resonate in this new ad-supported environment.

3. Partnerships with Platforms:

   • Collaborate with streamers to create native, contextually relevant advertising content.

Strategy to Follow by Producers

1. Optimize Content for Ad-Supported Viewing:

   • Design content with natural breaks for ad placement, ensuring a seamless viewing experience.

2. Experiment with Formats:

   • Develop shorter, episodic series that retain viewer engagement despite ad interruptions.

3. Leverage Ad Revenue:

   • Collaborate with streaming platforms to integrate product placements or sponsored content into programming.

 Source: https://thestreamable.com/customers-continue-to-embrace-ad-supported-streaming-plans-peacock-hulu-disney-plus-lead-the-way