Ads or Higher Fees a Deal-Breaker for Many Netflix Subscribers
While Netflix is far and away the SVOD leader, that doesn’t mean it's impenetrable. Data from Hub Entertainment Research's "The Future of Monetization" report says 23 percent of current Netflix subscribers would drop the service if it or their pay TV provider raised prices by $5 per month. A $10 per month increase would lead to 28 percent dropping Netflix.
Historically, Netflix prefers to keep price increases small, but even that can have consequences. Hub finds that 8 percent would cancel Netflix service if Netflix or their pay TV provider raised prices by $2 per month. In every scenario, more people are willing to cancel Netflix than their pay TV service.
While marketers would love for Netflix to begin showing ads (and Netflix has begun serving ads for its own programming between episodes), serving outside ads could be detrimental to its subscriber growth. Hub finds that 23 percent of Netflix subscribers would definitely or probably drop the service if it began showing ads during programs.
While viewers dislike seeing ads on paid services, they're enthusiastic about free ad-supported services. When asked which business model they preferred, 51 percent said free with ads, 40 percent said subscription with no ads, and 9 percent said transactional with no ads.
Hub's data came from an August 2018 survey of 1,617 adults 16-and-over who have broadband and watch at least 1 hour of TV per week.
For something that doesn't exist—and probably never will—the idea of an ad-supported Netflix tier gets a lot of attention.
Is the leading SVOD worried about the upcoming debut of Disney+? No, it says, noting that Fortnite is a bigger competitor than HBO.
Even after choosing four or more streaming services, many viewers are unsatisfied. Aggregation may be the answer, but only if viewers can customize their plans.