Parks Associates’ research finds US consumers are increasingly adopting ad-based video streaming service packages in order to save money on subscription fees.

Ad-Based Streaming: Consumer Demand & Engagement, a study of 8,000 US internet households, examines why ad-based services are experiencing a surge in adoption, which services are the most popular, and household sentiment towards the ad-based experience. The research reveals that on average, ad-based tier subscribers account for 57 per cent of the user bases among the eight leading streaming services MAX, Netflix, Disney+, Discovery+, Prime Video, Paramount+, Hulu and Peacock.

“Many video streaming services, needing to boost profits, continue to raise prices and have rolled out ad-supported plans to give subscribers options,” said Sarah Lee, Research Analyst, Parks Associates. “In many cases, these ad-based tiers are more profitable for businesses, adding urgency to the need to improve the ad experience for their subscribers.”

The motivating factors for VoD ad subscriptions go beyond just saving money. Roughly one-quarter of current VoD ad subscribers have adopted this tier to save money, while a similar share was attracted by a bundle or promotion. Additionally, many subscribers see the low-priced ad tiers as a low-risk way to try a new service or re-subscribe to a service they churned away from.

Parks Associates’ research also reveals the end-user experience needs improvement. Users commonly report the same ads repeat too many times, ad breaks are too frequent and long, and the content stops but no ads are shown.

“As services continue to raise prices and viewers shift to ad-supported tiers out of necessity, it is critical that services improve the ad-based experience or risk losing subscribers,” Lee said, “and the ad revenue that comes with it.”

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Tags: adverts, Disney, Hulu, netflix, Parks Associates