Ad-supported streaming is definitely here to stay. That’s according to numbers in a new survey by Antenna that tracks and quantifies streaming habits. Antenna did a deep dive into HBO Max and its two pricing tiers to analyze what their numbers mean for other streaming services, and just added an ad-supported tier to their premium subscription service.
HBO Max launched its cheaper, ad-supported tier in June 2021. At the time of launch, only 1% of US subscribers have signed up for the new tier. That number has grown steadily over the past year, to the point that now 12% of its subscribers — 1.9 million customers — have signed up for the streamer’s ad-supported tier.
New customers also make up an increasing proportion of advertising-financed subscribers. At least 25% of new subscribers have opted into the ad-supported tier of HBO Max in every month of 2022.
Not only do customers support ads with their HBO Max subscription, they’re generally happy with the results. Reportedly, 92% of HBO Max customers are satisfied with the ad-supported tier, the highest percentage of any premium ad-supported subscription service.
Ad-supported tiers of Hulu, Peacock, Discovery+, and Paramount+ also enjoy high endorsement rates from their subscription base, but lag behind HBO Max’s endorsement rate thanks to limited hourly advertising time and variety of commercials. Additionally, more customers are likely to join an ad-supported tier as first-time subscribers than downgrade from an ad-free tier; As such, both Netflix and Disney will attract a larger influx of subscribers to their ad-supported tiers than current customers who switch at launch.
This information comes at a good time for Disney+ and Netflix as both companies are in the process of rolling out ad-supported tiers. Streamers can each earn over $1 billion in additional revenue by introducing ad-supported subscription options.
One lesson both services should learn from HBO Max’s success is the number and frequency of ads. HBO Max adds only four minutes of advertising per hour to its content and does not include advertising in an HBO original program. Disney already owns the Disney+ library, so this limited promotional strategy will be easier to execute. Netflix, on the other hand, is still negotiating with studios over who gets what in terms of ad revenue, but the writing is clearly on the wall: More streaming services will be introducing ad-supported tiers, and soon.