Nearly half of U.S. Netflix subscribers would consider ad-supported tier, survey says

As Netflix prepares to launch a lower-cost ad-supported subscription tier, new consumer survey data from Samba TV and HarrisX sheds light on two key questions: how interested are consumers in a tier with ads, and would a lower priced ad-model cannibalize subscription revenue?

In short, the study suggests appetite is strong, both with current lower-tiered subscribers, as well a large net-new audience that has either never had or already canceled their Netflix subscription.

The Samba TV survey was conducted with HarrisX polling firm from August 29 through September 1 among 2,505 U.S. adults.

When it comes to current Netflix subscribers, nearly half (46%) would consider shifting to an ad-supported model once it’s available. That figure fluctuates depending on the maximum minutes of ads the new tier would serve per hour. It appears 5 minutes of ads per hour is the maximum that most are willing to consider. At that amount, the percentage climbs to more than half (51%) who would opt for a tier with ads if it were free.

However, Netflix hasn’t indicated it wants to introduce a completely free option – but rather one that lowers the price and introduces some ads. An earlier report from Bloomberg had said Netflix is considering a $7 to $9 per month price tag for a tier with ads.

The most likely scenario identified by Samba TV to play out is the 45% of Netflix users who would consider switching to a tier that was discounted by half of what they currently pay, with 5 minutes or less of ads per hour.

Currently, Netflix’s cheapest plan costs $9.99 per month (which is limited to one screen with no HD access), its most popular standard plan costs $15.49 monthly, while its premium subscription is priced just under $20 per month - all without commercials. 

Even if the service was free, less than 1 in 3 current subscribers would take on a tier with ads if there were 10 minutes or more of commercials.

Netflix hasn’t officially disclosed many specifics around its ad-supported strategy but tapped Microsoft as an ad sales and technology partner; made key new hires including Jeremi Gorman and Peter Naylor; and has been meeting with business partners as it makes plans, with some details emerging. The August report by Bloomberg said the streaming giant plans to sell about 4 minutes of commercials per hour, citing sources familiar with the company’s plans. The news outlet also reported Netflix plans to keep new movies and kids programming ad-free.

On the question of whether the business model would be in trouble (ie: if those paying a premium $20 per month subscription dropped to a cheaper tier that couldn’t close the gap with ad sales to make up for the subscription revenue) – Samba TV data suggests that’s not a risk, as current lower-tiered subscribers are more likely to switch.

Among current Netflix users, the survey found those most interested in shifting to tier with ads tend to skew older (52% of baby boomers and 48% Gen X), and middle-to-lower income. Around 48% of respondents making under $75,000 per year showed interest in moving to a tier with ads, while 44% of those making above that figure were interested.

Beyond current subscribers, Samba finds there’s a large opportunity to bring in a new audience via ads that aren’t currently reached or monetized at all today. In a survey of 1,200 non-Netflix subscribers, 92% report already watching ad-supported streaming platforms.

“Advertisers are not the only ones eagerly anticipating the roll out of Netflix’s new ad supported tier” said Samba TV CEO and co-founder Ashwin Navin in a statement. “There appears to be a strong appetite for an ad model from both current Netflix users, and more importantly from those who have either never had, or who have previously canceled, a Netflix subscription.”

According to Samba, this cohort is not only open to ads, but are familiar with the value exchange in an ad-model. The ad-supported TV viewing group also includes a large demographic of younger and more affluent audiences. The survey found 1 in 3 non-Netflix subscribers who already watch ad-supported streaming are Millennials and Gen Z, and 1 in 4 earn more than $100,000 per year.

“The exciting value proposition from Netflix's upcoming ad model lies in the possibility it offers to bring in and monetize net new or lapsed subscribers,” Navin continued. “9 out of 10 adults who do not currently have a Netflix subscription watch other ad-supported streaming content today, indicating these audiences have no aversion to watching ads in exchange for free or reduced price content and are prime candidates to turn to Netflix's new ad-supported tier.”