How important is a commercial-free experience to Netflix?
A new study from Hub Entertainment Research suggests that 23% of subscribers would drop the service if it kept the same price point but incorporated ads into its programming.
Notably, however, Hub also found that if Netflix added ads but simultaneously dropped its prices by $2 or $3 per month, far fewer subscribers -- only 16% -- would be likely to drop the service.
“When we ask subscribers what they consider to be the most attractive features of Netflix, the fact that it’s ad-free consistently ranks toward the top of the list,” says Peter Fondulas, principal at Hub and co-author of the study.
“For the moment, that remains a key distinguishing characteristic of the service, especially as other OTT providers attempt to compete with high-quality original shows of their own,” he notes.
The data also highlights how new entrants into the OTT video space have more flexibility than existing stalwarts like Netflix.
“This data shows the potential downside for ad-free platforms that move to incorporate ads after the fact,” says Jon Giegengack, principal at Hub Entertainment Research. “Hulu has been growing, even though it both charges for a subscription and shows ads. But it’s easier to do that from the outset than it is to take away a benefit that people have become used to.”
The good news for advertiser: Research shows a significant percentage of consumers — 38% — are willing to allow advertisers to collect information about them in order to show more relevant ads. Among adults 18-34, that number is even higher: 48%.