In recent years, several major streaming services have rolled out cheaper services that include ads. For example, in July 2022, Netflix announced that it would soon be offering a cheaper “with ads” service to customers, despite always offering a completely ad-free service.
Now, according to data released by the analytics company NPAW, most streaming companies could soon introduce services with ads or increase the volume of ads on their existing ones.
The research shows that a massive 76% of subscription streaming video-on-demand services plan to increase the number of ads in the next two years, with more competition being given as one of the main contributing factors for this decision.
There are now dozens of video streaming services to choose from, and even the major players like Netflix, Disney Plus, and HBO have been struggling to compete in the last few years. Because of this, many are now turning to commercials in content to keep up in the industry.
Over half of the video services said they were considering a hybrid model, which would mean customers could still pay for ad-free services if they wanted, but it would cost more than the ad-supported tier, which would be sold as a budget option.
Industry experts believe that many consumers are more open to ads than previously believed, especially when it saves them money. A recent study by Horowitz called “State of Media, Entertainment & Tech: Subscriptions 2023” found that 69% of US consumers are using free ad-supported streaming services, compared with 27% in 2019.
Consumers often give trying to save money as the motivation behind this. With many video streaming services, including YouTube, Hulu, and others, increasing their prices, customers are often on the lookout for ways to cut back on spending, including a cheaper payment plan.
According to an expert from Omdia, “Online video advertising is the fastest-growing market. We are projecting that this market will reach $12 billion [in revenue] globally in the next five years,” Masalskis said. “The U.S. will remain the largest territory in FAST, but it is growing in a number of regions globally as well.”