Ad tiering pays off as 36% of U.S. subscribers upgrade to avoid ads

Tuesday, February 20th, 2024 
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Ad tiering pays off as 36% of subscribers level up to avoid ads

  • Landmark study of 5,000 American subscribers shows the impact of ads, bundling, and password-sharing crackdowns on the US subscription economy

SAN JOSE, Calif. — Following the news that Prime Video is introducing ad-funded content, new research from Bango shows that ads are delivering serious gains for streaming and subscription giants. According to the data, the launch of ad-funded tiers has driven more than a third of US subscribers (36%) to upgrade their services.

But it’s a dangerous game for subscription providers, with 31% of subscribers saying they’ve canceled at least one service because ads were introduced. Strong objections also remain towards ‘premium ad tiers’, with 78% saying that paid-for subscriptions should never display ads.

These findings and more come from Bango’s newly released Subscription Wars 2024 report, which incorporates research from over 5,000 US subscribers on their habits, behaviors and attitudes towards subscriptions.

According to the Bango data, acceptance of advertising varies across different subscription types. While 35% of TV and video streamers have paid for an upgrade to avoid watching ads, this figure rises to 48% among music subscribers. For those streaming sports content (SportsVOD), the number is even higher with a massive 71% opting to upgrade when ads are introduced into their services.

Password crackdowns and flexible subscriptions

The Bango report also highlights the impact of recent crackdowns on password sharing. Since the new, strict rules were introduced by services like Netflix, 35% of subscribers have started paying for a service they previously accessed for free via someone else’s account.

While these changes are driving subscribers to sign up and pay out, they’re apparently not enough to keep some people hooked. More than a third of subscribers (35%) still regularly jump between platforms, pausing and restarting their subscriptions to access the content they want. According to Bango’s analysis this demand for flexibility and cross-platform experiences isn’t going away.

Subscription hubs and ‘Super Bundling’ define 2024

2023 saw services like Verizon +play launch as America’s first all-in-one subscription hub, ‘Super Bundling’ services such as Netflix, Starz, Max, Paramount+ and more all in one place.

According to data from the Bango 2024 study, this represents a welcome trend for subscribers, with 73% saying they want one platform to manage all of their subscriptions in one place. 69% would also like the ability to pay for multiple subscriptions via one monthly bill.

When it comes to offering these all-in-one services, American subscribers are wary of a return to ‘cable TV’ style packages, with only 29% wanting their cable company to manage their subscriptions. Instead, half of subscribers (50%) say they want their cell phone provider to launch a content hub. The majority of these (61%) would even pay a higher cell phone bill to receive this service, with the average subscriber happy to pay an additional $364 per year (+19% of their annual bill).

Commenting on these findings, Paul Larbey, CEO of Bango said, “American attitudes towards subscriptions are changing. While many people predicted that ad tiering would be firmly rejected, in reality subscribers are welcoming the flexibility it provides. People want choice. Those who are happy to watch ads accept them, those who aren’t pay a little extra. The important thing is that they have the freedom to choose.”

“It’s that same demand for choice that’s driving the move towards content hubs and Super Bundling. Subscribers want to jump between different content and services but they don’t want the admin headache of managing multiple accounts and paying multiple bills. With the rise of Super Bundling in 2024, we’re expecting to see that headache disappear. At the same time, these all-in-one platforms will help drive new revenue for cell phone providers and allow subscription services to share users rather than fighting over them. It’s a win-win scenario for businesses and subscribers alike.”

Links: Bango