Reports this past month that Netflix is accelerating its move to an ad-supported tier have grabbed the attention of everyone in ad land searching for new ways to reach consumers across today’s incredibly fragmented and cordless consumer landscape.
The cracks in the Netflix “no ads ever” wall grew into full-blown fissures this week when outlets reported (paywall) that Netflix executives recently held meetings with Roku and Comcast leaders about supporting the launch of an advertising-supported subscription tier. The accelerated move is a welcome if not overdue shift for the leading streaming player. The move comes several months after Disney+ announced the details around its own new ad-supported tier as nearly every major streamer leans into an AVOD (advertising-based video on demand) model.
The broader industry shift toward the adoption of an advertising tier follows reporting from our company, Samba TV—which helps marketers and media companies measure and develop omni-screen advertising campaigns—that in the first quarter of 2022, the average U.S. household that subscribed to a streaming service capped their number of subscriptions at two (59% had two while the numbers drop precipitously for three or more). Consumer demand for streaming content continues to accelerate while at the same time a combination of pocketbook considerations has brought into focus the reality that consumers are simply not willing to replace one $100-plus monthly cable bill with another $100-plus collection of subscriptions. Further, studies show that nearly two-thirds of consumers believe streaming services are already too expensive.
At the same time that we see a natural ceiling forming for the number of subscriptions a consumer is willing to accept, we are also beginning to see the evolution of the streaming…