Viewers OK With Ads on OTT Services—With Conditions

NEW YORK—Subscribers to streaming/OTT services generally are OK with the concept of advertising in exchange for ad-supported or free subscriptions. However, they are sensitive about the value of ads in exchange for lower subscription rates and are not interested in ads in a traditional linear format.

These are a few of the findings in Hub Entertainment Research’s “Monetization of Video” report, which surveyed 1,764 broadband subscribers last month.

According to the survey, an equal percentage of respondents are cool with advertising on OTT services in exchange for free or lower-cost subscriptions, even without the capability to skip ads. However, the preference falls with age; 20% of respondents 18-24 do not support ad-supported streaming services, but that figure is 10% for older viewers.

Streamers that do use ads to subsidize subscription costs have to be sensitive to viewer perceptions of ad/price balance, according to Hub. “If Netflix is considering including ads in its service, the results show that the monthly subscription fee would need to be significantly lower than the current fee—to avoid losing subscribers,” the researcher said.

Subscribers also don’t want their streaming service to reflect a traditional linear TV service either. “Almost no respondents who viewed a show recently on linear through an MVPD considered the ad load reasonable—and a third felt it was unreasonable,” Hub said.

Another attractive feature for OTT services is the absence of term contracts that pay-TV providers traditionally require. Among 18-34 year olds, a seven-day free trial has become more important in attracting new subscribers in recent years, with the percentage rising from 29% to 38% in one year, Hub said.

Hulu is tops in customer satisfaction, with 80% of respondents rating it an “excellent” or “good” value, while Netflix came in second at 75%. That’s also the percentage of respondents who say that having access to Netflix on their cable box makes their cable TV subscription more valuable.

Tom Butts

Tom has covered the broadcast technology market for the past 25 years, including three years handling member communications for the National Association of Broadcasters followed by a year as editor of Video Technology News and DTV Business executive newsletters for Phillips Publishing. In 1999 he launched for internet B2B portal Verticalnet. He is also a charter member of the CTA's Academy of Digital TV Pioneers. Since 2001, he has been editor-in-chief of TV Tech (, the leading source of news and information on broadcast and related media technology and is a frequent contributor and moderator to the brand’s Tech Leadership events.