Streaming services like Disney+ are fully embracing their ad-supported tiers to raise revenues, while also offering a lower-priced alternative for its customers. According to a recent survey from Samba TV and Harris X, which polled over 2,500 adults in late August, this shift to ad-supported streaming platforms is being embraced by millennials, who are much more open to watching commercials than other generations.
Because most millennials have grown up watching cable television, they are generally much more accepting of ads appearing during a TV show. However, one of the biggest annoyances, is seeing the same commercial repeatably coming up, as according to the survey, 71% of the people asked, said that seeing the same ad over and over again, damages their perception of the product/brand.
With this age group now making up a large population of the US, with over 72.2 million millennials, this group has huge spending power, which is estimated to be around $2.5 trillion a year.
Samba TV co-founder and CEO Ashwin Navin said in a statement:
“Millennials are the generation that grew up on cable and were first to cut the cord, and have revealed themselves to be a core audience on AVOD and FAST platforms. Their willingness to consume ads when streaming is a unique opportunity for advertisers to reach more than 20% of the US population, with more spending power than retiring baby boomers. By embracing an omniscreen strategy that addresses all the platforms where millennials consume video, advertisers can align their campaigns to connect with this hugely impactful audience.”
With the cost of living crisis continuing to increase prices of streaming services such as Netflix, Apple TV+ and Disney+, many are shifting to the cheaper ad-supported tiers to keep the content they want to watch, without spending more money for the ad-free tiers. Especially as streaming platforms are the preferred way of watching television, with 8 out of 10 people asked, using a streaming service and 84% of them currently subscribed to Netflix. And 68% of those asked have said that they now have an ad-supported subscription, which is higher than any other generation. And this will continue to grow as 68% of those asked are also likely to downgrade to an ad-supported tier in the future.
Financial issues are likely to be one of the key reasons why people subscribe to the ad-supported tiers, especially as the ad-free tier prices continue to rise, as the studios push people more to the ad-supported offerings, where they make more money. According to a recent report from Ampere Analysis, ad-supported tiers could generate over $10 billion a year in the US alone by 2027. Many streaming platforms, including Disney+, are rolling out their ad-supported tiers internationally.
One of the biggest draws to Disney+ is the enormous back catalogue of content, especially shows and films for kids, which is one of the biggest reasons why families are subscribed to Disney+, as according to this recent survey, 73% of millennial parents have subscribed to a streaming service, just for their kids.
With so many different streaming services available, it’s becoming increasingly difficult to justify the cost of ad-free tiers for all of them, especially as they continue to raise those prices, while keeping the ad-supported tiers cheaper on purpose, to encourage subscribers to downgrade. It’ll be interesting to see how the introduction of ad-supported tiers will impact younger viewers, who have grown up in a world, where their content was on hand through platforms like Netflix and Disney+ without ads, though the counterargument will be that they are likely to see many more ads on YouTube and other social media platforms.
Much like with cable television, customers are going to become much more used to watching commercials, as the alternative without ads is just going to be too expensive for most to be able to afford. Going ad-free will soon become a luxury for many of these streaming services, especially as the studios keep pushing those ad-free tier prices up.
And it’s not just existing subscribers sliding over to the ad-supported tiers, as according to the survey 21% of millennials with a Netflix subscription signed up for the ad tier. Disney has known this is a recipe for success for years, as the ad-supported tier of Hulu has over 90% of subscribers and with a $10 difference between the tiers, it’s not hard to see why.
With Disney offering both Disney+ and Hulu together with ads for just $9.99 and the ad-free version of the same bundle costing double that, its not hard to see why people are downgrading and if you do this across multiple platforms, this can add up to a significant saving!
Will you be downgrading to ad-supported versions of streaming services? Let us know on social media!
Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom.