Subscriber response mixed to introduction of ad-supported tiers

The introduction of ad-supported subscription tiers has seen a mixed response from consumers, according to new data from Bango. Some are upgrading subscriptions to avoid ads or canceling altogether, while others have stepped down to lower-cost ad-supported options.  

According to Bango’s newest Subscription Wars: Super Bundling Awakens survey of 5,000 subscription users, forgetting about a subscription yet still paying for it is the reality for about one of three consumers—and with rising prices and a growing number of subscriptions, users are getting pickier than ever when it comes to determining what services are actually worth holding on to..

Anil Malhotra, Chief Marketing Officer at Bango, based in Cambridge, UK, doesn’t predict that consumers are likely to give up on subscription services in retaliation to rising prices, but the added flexibility of tiered subscription models are slowly but surely inching open the door for plans that consumers haven’t historically been in favor of, like ad-supported subscription tiers.

“Ad-subsidies have proved very popular,” Malhotra told StreamTV Insider.

While 56% of Bango respondents recently canceled an SVOD subscription over a price hike, some consumers are shifting gears into more economical, ad-supported options. The report found 40% of those surveyed downgraded an existing subscription to a cheaper ad-supported version once it became available.

The results follow pushes from multiple streamers into the ad-supported space. In January, Amazon officially launched limited advertisements on Prime Video across its Prime membership, with an additional $2.99 monthly upcharge on top of a $139 annual subscription fee to go ad-free. That came on the heels of major players like Disney+, Netflix, Max, and Paramount+ rolling out their own ad-supported options, both to drive new advertising revenue opportunities and to provide more options and lessen the economic load for consumers on their SVOD subscriptions.    

However, ad-supported plans aren’t winning over everyone.  About 35% of TV and video streamers upgraded a subscription to avoid ads once an ad-supported tier launched and 31% reported canceling a subscription because ads were introduced. Those streaming sports content (SportsVOD) were even more likely to upgrade, with 71% opting to do so when ads were introduced.

While the Bango report said services that launched a free ad-supported tier, in general, have had positive reception, that attitude changes for paid subscriptions. Bango found a whopping 78% of consumers reject the notion that a paid subscription should include ads whatsoever.

Between December 2023 and January 2024, Bango found that households were paying $77 per month across subscription services, or $924 per year, with the average consumer having approximately 4.5 subscriptions at a time. SVOD remains the most popular subscription type with 76% of respondents subscribing to at least one Film and TV streaming service.

That being said, the sentiment around SVOD ad services are dynamic as households try to manage all of their subscription services in one fell swoop. Malhotra said Bango research shows consumers are warming to cheaper ad options on film and TV streaming, published content, and in retail contexts. They are not fond of ad-supported tiers in gaming, home services, or education—yet.

Beyond ad-supported SVOD options, another challenge is the fact that consumers are struggling with keeping their subscriptions straight to begin with, even though respondents are largely open to more of them. Sixty-five percent of survey participants reported that they could not afford all of the subscriptions they wanted, yet 35% were not even clear on what they were already spending per month on subscription services. The gray area of keeping track of subscription billing is even harder for younger generations with 53% of Gen Z users not sure of how much they were already spending on subscriptions per month.

One proposed solution to managing a suite of subscriptions, whether ad-supported or not, are what Bango terms as super bundles, which merge together all independent subscriptions into one core interface that’s easier to track and manage. Bango has stake in this game, as it’s already a player in the space with tech support behind Verizon’s +play subscription aggregation hub.

Malhotra said that from Bango’s research, telcos and broadband providers are subscribers first choice as Super Bundle administrators “precisely because consumers want services over those connections,” he says. Another perk of larger Super Bundles is that they give consumers a greater sense of ease because there is clarity on what customers are buying and how to manage their service. If there was more clarity on pricing, timelines, and services across SVOD hubs from a Super Bundle interface, that could turn the tides on consumer willingness to sign on to cheaper ad-free tiers, too.

“[Customers] tend to stay longer and churn less, [while providers] reach more people, spend less on customer acquisition, keep their customers for longer,” he said. “The more transparent we make subscriptions consumption and costs, the more consumers will trust this way to take the services they want.”