Study Finds Some Subscribers Think New Netflix Tier Is ‘Ad Heavy’
New data on U.S. video streaming has found that subscribers of Netfix’s new `Basic with Ads’ subscription tier is to varying degrees considered “heavy with ads.”
Meanwhile, data gathered by online streaming recommendations service JustWatch, recently revealed that Prime Video remained the leading subscription video on demand (SVoD) service in the U.S. during the first quarter of 2023. Netflix, which a year ago was the long-time on-demand SVoD streaming service, held its firm grip on second place with Disney+ and HBOMax vying for No. 3.
According to the findings of market research organization Aluma Insights Netflix’s ad-supported tier averaged less than five minutes of advertisements per viewing hour, yet nearly 50% of the OTT service’s “Basic with Ads” subscribers found it ad heavy, including 17% who found the advertising volume “excessive.”
In comparison typical linear TV programming has over 13 minutes of ads each hour, 2.5 times that of Netflix’s ad-supported tier, Aluma said.
“Having to watch only five minutes of ads per hour is a delightful reprieve from the much heavier ad loads of linear TV,” said Michael Greeson, founder and principal analyst at Aluma. “But linear TV is not necessarily the advertising benchmark for today’s multi-source viewers, a growing number of which came of age watching ad-free streaming video services such as Netflix. Undoubtedly, this has altered how they perceive ad loads.”
Aluma said 28% of ad-supported Netflix subscribers that switched from an ad-free tier found the ad load far too heavy, which was 2.3 times heavier than new subscribers that signed up for “Basic with Ads” directly.
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The Aluma study also found:
• Nearly half of new ad-supported Netflix users are 65 and older, four times the rate among ad-free switchers.
• 25% of ad-free switchers are Hispanic, twice the incidence among new subscribers.
• New ad-supported users are 33% more likely to reside in the Southern US than are ad-free switchers.
• Ad-free switchers are 34% more likely than new subscribers to have children in the home.
• New ad-supported users are four times more likely than ad-free switchers to be Late Mainstreamers or Laggards.
Aluma research also found that only 6% of U.S. households now use an Xbox, PlayStation or Nintendo game console to stream video, down from 26% in 2015, with the great majority of streaming service viewership coming from integrated smart TVs.
Meanwhile, JustWatch data from the first quarter of 2023 showed that Prime Video remained the largest streaming platform in the U.S. in the period. Also in the quarter, Paramount+ overtook Apple TV+ after a solid earning quarter, but still trailed the larger players.
Disney+ and HBO Max were locked in a tight battle for third place, but after losing subscribers in Q1, Disney+ may soon lose that race, JustWatch said.
Since January, HBO Max has continued to gain momentum and added +1% market share, passing a standstill Disney+. The growth of midfield players Apple TV+ and Paramount+ Interestingly, Disney+ has dropped the most since January. Paramount+ continues to gain traction, overtaking Apple TV+.
Prime Video remained on top in Q1, and Netflix stayed firmly in second place.
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By Greg Tarr
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