Study Confirms More People Want Streaming Ads

Not so long ago, in the early days of streaming, part of the appeal of watching content on services like Netflix and Amazon was that they didn’t have any commercials. It was a time when the advent of the DVR was still sending chills through Madison Avenue, which worried about people fast-forwarding through their ads.

Streamers seemed to further threaten the fragile TV ecosystem, giving the ad-adverse a place where they didn’t even have to press a fast-forward button. It seemed an environment where ads would never be welcome.

What a difference historic inflation levels can make. Suddenly, people are no longer avoiding ads on streaming. Some are even seeking them out.

That’s according to a new 2023 Inflation Nation Report from Horizon Media’s Why Group, which examines Americans’ spending and saving habits amidst record-high inflation.

The report found that ad-supported streaming options have never been more in-demand, largely because people are looking to save money, and ad-supported tiers are cheaper in exchange for watching the advertising. For instance, Netflix’s recently launched ad tier is less than half the price of its standard plan and $3 less per month than its most basic non-ad-supported plan. And Disney+ raised its pricing at the end of last year but introduced an ad-supported tier that costs only $7.99 per month, $1 more than Netflix’s option.

Maxine Gurevich, senior vice president of cultural intelligence at Horizon Media, says attitudes toward ads and streaming have shifted due to economics.

“It’s not people that have changed. It’s the times,” she says. “Specifically, the economy. In addition, the entertainment landscape is now filled with subscription services asking for people’s money in exchange for access to content.”

The report found that ad-supported streaming subscriptions have seen a seven-point increase as people aim to save money while still enjoying entertainment choices. Further, one in three people who cancel a streaming service do it so they can switch to an ad-supported streaming service.”

The inflation situation has created an odd push-and-pull dynamic. Nine in 10 surveyed said they were aware of inflation, and two-thirds said they were concerned or very concerned about its impact. Yet they also reported a need to use entertainment as a “release valve” to unleash some of the economic pressure they feel. Basically, they need to spend money to relax because they’re wound up about spending money.

Interestingly, young people, who grew up with streaming services and also with the ad-free options they presented, are most likely to desire ad tiers. The survey found 21% of people 18-34 said they have switched or plan to switch to an ad-supported streaming service to cut costs vs. 18% of 35-44s, 15% of 50-64s and 15% of those 65 and older.

“It makes sense then that younger consumers who are feeling more financially stretched say watching with ads is a viable option if it means they don’t have to spend so much on subscription fees,” Gurevich says. “The bottom line is ads are something people love to complain about. But, if they’re getting value out of the service they’re watching, ads don’t necessarily undermine their perception of value. The key to future success will be maximizing relevance of the ads they see while minimizing feelings of intrusiveness.”