Streamers will have a major presence at the TV Upfront presentations to advertisers in New York this week. Research firm Antenna says nearly 25 percent of domestic customers of Disney+, Netflix and Max opted for reduced-price, ad-supported subscriptions in February, while more than half the customers for Hulu+ and Peacock opted for the same. Antenna CEO Jonathan Carson said that “given the choice, Americans are choosing ads,” which is good news for marketers, who were initially concerned that the shift from cable to a la carte subscription streaming would edge out advertising.

Hulu was a notable exception, with more than half its customers watching ads. As the subscription base of nearly every major streaming service has plateaued, advertising represents a new revenue stream for media companies.

“The five biggest streaming services, excluding Amazon, added a total of just four million customers globally in the first quarter,” reports Bloomberg. On an annual basis, the five top streamers “added fewer than 4 million subscribers in the U.S. last year,” down roughly 80 percent from 2021.

The services matured as competition intensified, resulting in churn as many consumers balked at paying more than $10 a month per service. Streaming companies are turning to layoffs and other cost-cutting measures to increase profits.

Whether advertising is the ticket for reversing slowed growth has yet to be determined. “While streaming’s early adopters were wealthier, younger and willing to pay to forgo ads, there are still tens of millions of people who are willing to sit through commercials if they get to save money,” Bloomberg writes of the study from Antenna, adding that subscribers to Netflix’s ad-supported tier “are older, poorer and less educated than the average customer for its premium tier.”

Seventy-five percent of subscribers to advertising tiers from Netflix or Disney+ and take a second subscription also chose the cheaper ad tier for their second service, Antenna found.

By the end of this year, nearly every major media company will have a free, ad-supported television — or FAST — tier like Pluto or Tubi on offer, Bloomberg says. In addition, they will also have an “ad lite” subscription averaging a couple of minutes of commercials per hour “for cost-sensitive customers who still want to see new programs,” as well as an ad-free premium tier.

Although they’re vying for ad dollars with the big guys, the numbers for most of the new subsidized streaming services are still quite small, especially as “compared to the base for Hulu, to say nothing of YouTube.”

Related:
Cord-Cutting Hits All-Time High in Q1, as U.S. Pay-TV Subscriptions Fall to Lowest Levels Since 1992, Variety, 5/12/23
Cable TV Companies Could Lose Over 9.3 Million TV Subscribe in 2023 As Cord Cutting Accelerating, Cord Cutters News, 5/15/23
New Research Shows UK Consumers Favor Product Placement Over Traditional Advertising, PR Newswire, 5/15/23