Why Do Ad-Supported Streaming Services Attract Less Subscribers?

Why Do Ad-Supported Streaming Services Attract Less Subscribers?

Streaming services gain revenue either through a subscription-based model, advertisements, or a combination model. The finest examples are Netflix, and Disney Plus, that focus on the combination model because advertising alone deters users. They offer both an ad-supported plan and an ad-free plan.

Availability of content and number of subscribers vary across countries. For instance, researchers in New Zealand found that 65.26% of respondents use at least one paid subscription streaming service. Moreover, 53.78% of subscribers said they use Netflix, this was because of the multiple pricing plans and other features. For further details check out Netflix NZ review.

However, the rival streaming services, Disney+ has had trouble holding onto its paying customers. Disney+ has a total of 221.1 million subscribers, including ESPN, Hulu, And Disney Plus Hotastar which is available in India.

At first glance, the number of subscribers must look a lot. This is a result of the pandemic, there has been a shift in viewership toward streaming services. Before and after the pandemic, prospects seemed bright, but that is no longer the case.

Disney plus has faced a decline of total of 5% compared to the previous year, also it was noted that the streaming service faced a loss of 1.5 billion US dollars this quarter, which was 630 million US dollar a year earlier.

The researcher has claimed that the production, marketing costs and underperforming series were the reasons for this loss. However, if we look at the stats, we can notice a shift of subscribers from Disney Plus to other platform, mainly because those platforms do not cater to advertisements.

Researchers have hypothesized that more people would switch to ad-free plans if they were both less expensive and provided more advertisements. The ad-supported plans that Disney+ offer may not be appealing to potential new customers, but a sizable portion of their current subscribers may decide to switch to the cheaper option.

So, how do you think streaming platforms will respond to this sea change in public opinion?

Streaming services have widespread consumer support because of the cost savings they provide to users.

There is a lot of competition between streaming services, even though ad-supported content is often free or inexpensive. Therefore, despite the availability of free or cheap ad-supported content, streaming services are still fighting to attract and keep users.

We’ll discuss some of the issues that have led to streaming services losing viewers today:

Emotional Intelligence is Not an Area of Expertise

Even with technological advancements, content producers still need help understanding how to win their audience’s hearts, minds, and moods in terms of improving the discovery process.

While no one has done a good job of evaluating and utilizing these emotional characteristics up to this point, it is without a doubt one of the upcoming innovations that will distinguish platforms and hook consumers.

In the interim, we’re only now beginning to comprehend how factors like AVOD and FAST content are influencing consumers, differentiating streaming services, and assisting with subscriber loyalty.

Streaming company providers may still need to grasp viewer habits or moods fully, but if they step back, they’ll notice that other variables may be improved under their control. These include the kind, timing, and frequency of commercials.

It seems logical if I’m watching a Superhero movie on Disney+ and an advertisement for the upcoming “Wakanda Forever ” film appears. It ought to be scheduled between scenes because inserting that advertisement in the middle of a scene would be intrusive.

I don’t necessarily want to watch the advertisement a dozen times simply because it is relevant. To prevent viewers from becoming irritated, there should be a frequency cap.

Consumers’ Tastes and Technology changes

The single gem in the VOD media crown at first was subscription video on demand (SVOD). The mentioned Disney+ platform was one of many, along with Hulu, Netflix, and Amazon Prime Video. For a yearly subscription, they allowed customers in quarantine access to an unlimited library of ad-free material.

Long-term growth is doubtful, as in this market, there is a lot of competition, admission costs are rising, and membership fatigue is imminent.

Streaming is Up Against Other Activities for People’s Time

When the pandemic struck, being caged up at home caused more people to watch TV, which led to an increase in the number of individuals signing up for streaming services.

However, since that time, the globe has once again become more approachable, and people now have more options for how to spend their spare time than they did in 2020 and 2021.

In general, people consume the same amount of time each day streaming TV as they did in Q2 2020, but other types of media, like gaming, also saw growth during the epidemic. Because each individual has a limited time, streaming competes with all other types of media.

Only a Few Widely Read Titles are the Sole Focus of Resource Libraries

The vast volume of content is the one thing that all streaming services have in common. But that doesn’t always mean they’re using it all. Streaming services typically ignore less well-known or less well-liked titles in their quest to offer the newest, best, and most popular material. This puts them at a disadvantage as they aren’t indexing every title to be included in the recommendation process — it needs to be more about serving up the proper kind of material and less about popularity.

Streaming Experiences involving ads are unpleasant

Consumers are more likely to view a commercial if they feel they would benefit from it, according to studies, which represents a chance for streaming services. Streaming services can perfect these engagements to produce seamless ad experiences if they begin tracking, tagging, and using the information to its fullest potential.

Sustaining viewer engagement while ensuring advertisers are targeting the appropriate audiences and having a return on their ad spend is achieved by inserting commercials in a non-disruptive manner.

People are reevaluating their outgoings due to the cost-of-living dilemma

One-fourth of people have begun considering the price of in-home entertainment and possible ways to make savings. The cost of streaming has been a significant worry for consumers for some time, but it still lags below more urgent concerns like food, shelter, and transportation, according to our research.

Currently, the cost is a major element that causes people to cancel, whether it be because the cost is too high, they are purchasing too many, or they are not using the service enough to receive their money’s worth. However, there are steps businesses may take to maintain their clientele.

The possibility to pay less for a commercial tier may increase subscribers’ propensity to maintain their TV subscriptions. Nearly half of customers agree with this viewpoint, and given that just a fifth of them actively strive to avoid advertisements, the trade-off is probably a good idea. Learn more about why streaming subscribers resist idea of trading down.

Ending remarks

The combination of these factors is what determines how the experience unfolds. Who wins the competition for streaming customers will depend in part on the timing, frequency, and relevancy of each advertisement as well as how well these commercial viewing experiences are implemented. You can also check out reasons to advertise business on Facebook.

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About the author



Tom is a gizmo-savvy guy, who has a tendency to get pulled into the nitty gritty details of technology. He attended UT Austin, where he studied Information Science. He’s married and has three kids, one dog and 2 cats. With a large family, he still finds time to share tips and tricks on phones, tablets, wearables and more. You won’t see Tom anywhere without his ANC headphones and the latest smartphone. Oh, and he happens to be an Android guy, who also has a deep appreciation for iOS.