Some Consumers Would Drop Netflix If It Adopts Ad Model

by Wayne Friedman , July 3, 2019

A big chunk of Netflix consumers could drop the big digital video platform if it changed its business model to include advertising -- even with a decline in monthly pricing.

While 53% say they would keep Netflix if the service drops its subscription fee by two dollars per month, 14% would drop it if it added advertising, according to a recent survey from Hub Entertainment Research. The remainder was “unsure.”

Better results were seen at bigger price declines: At three dollars less per month, 60% say they would keep Netflix, with 12% dropping the service.

Hub also asked consumers what they would choose if prices were raised for a no-advertising plan, but remained the same under a new ad-included plan.

Some 58% said they would go with the service that include advertising, with 20% saying they would spend $3 more a month to continue with the no-advertising service.

Almost a quarter -- 22% -- would do neither, dropping Netflix altogether.

Even at a lower increase of $1 more a month for no ads, 11% of consumers would drop Netflix, not taking either plan. (However, 49% would continue with the current no-advertising service; 40% would sign up for the ad-supported plan.)

“One thing is clear from these results: After one increase already in 2019, any attempt by Netflix to use an ad-supported plan as a reason to hike its ad-free price again could seriously backfire,” says Hub.

Earlier this year, Netflix raised its prices for all its plans from $1 to $2 a month. Its most popular plan rose from $11 to $13.

The data comes from a recent Hub study, conducted among 1,765 U.S. consumers with broadband, who watch at least one hour of TV per week. The data was collected in June 2019.

advertising, digital, netflix, streaming, tv

3 comments about "Some Consumers Would Drop Netflix If It Adopts Ad Model".

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Ed Papazian from Media Dynamics Inc, July 5, 2019 at 10:58 a.m.
Wayne, unless Netflix was nuts, they would offer subscribers a choice. Those who are against ads could stay with the ad-free platform and pay more.. So all of this discussion about cancelling because of ads is not realistic..
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Douglas Ferguson from College of Charleston, July 5, 2019 at 12:20 p.m.

So if it’s such a slam dunk idea, why has HBO resisted? I wish the pundits would quit speculating. It’s only plausible because a group of broadcasters dreamed it up for Hulu. Even Disney says no ads.

Ed Papazian from Media Dynamics Inc, July 5, 2019 at 4:34 p.m.

Douglas, nobody claims that it's a slam dunk idea but it's the most obvious alternative option. As for HBO, it has never approached the size and volume of audience that Netflix has attained. Moreover, HBO started at a time when the TV networks were not only dominant but also reaching everybody---including your favorites, the millennials. Whether advertisers would have shifted significant ad dollars away from the networks to HBO in the 1980s, 1990s and even the first 10-12 years of this century is, at best questionable, especially as the basic cable channels were competing for their share of the ad dollars throughout this period. As for what HBO might have done about taking ads more recently, I can't really say. However, I doubt that HBO is carrying the kind of debt that Netflix has. So, maybe, the need isn't as great. Or, maybe, HBO's owners never thought of it.