A recent study by Aluma Research has found that nearly half of Netflix’s new customers using its ad-supported option find the advertising messaging “a bit too much” or “far too much.” This poses a challenge for the streaming giant, which recently launched its Basic with Ads subscription plan to offer a cheaper alternative to its standard ad-free service.
New Subscribers Unhappy with Heavy Ad Load
According to the Aluma Research study, 49% of new Netflix customers who signed up for its Basic with Ads service found the advertising load to be “heavy,” while 17% found it to be excessive. This is despite the fact that the ad load is comparable to that of other streaming services, at about five minutes per hour of programming.
Existing Subscribers are More Accepting
In contrast, existing Netflix subscribers who have been using the standard ad-free service do not feel that the advertising component is too much. Only 28% of ad-supported Netflix subscribers who switched from the ad-free tier found the ad load to be “too heavy.” This was 2.3 times greater than new subscribers who signed up for Basic with Ads.
Age Divide in New Ad-Supported Subscribers
The Aluma Research study also revealed that half of the new ad-supported Netflix users who are new to the service are aged 65 and older, which is four times higher than those who switched to Basic with Ads from the standard ad-free service. This suggests that the cheaper subscription plan is attracting a more mature audience who are willing to tolerate a certain level of advertising.
Netflix’s Push for Ad Revenue
Netflix’s move to introduce a cheaper ad-supported subscription plan comes as the company seeks to generate additional revenue streams beyond its traditional subscription model. In February, Netflix reported that it had 600,000 “monthly active users” for its three-month-old advertising option, three times the level it launched with in November 2022. However, the study by Aluma Research suggests that the heavy advertising load could lead to customer churn and ultimately impact Netflix’s bottom line.
Conclusion
While Netflix’s new Basic with Ads subscription plan offers a more affordable option for customers, the study by Aluma Research suggests that the advertising load could be a dealbreaker for some users. As the streaming giant seeks to diversify its revenue streams, it will need to find a balance between advertising revenue and customer satisfaction to retain its position as a leading player in the streaming industry. Here are some potential frequently asked questions and answers that could provide more information about the entities mentioned in the article:
Frequently Asked Questions
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What is Netflix’s history and background?
Netflix is an American media-services provider founded in 1997 by Reed Hastings and Marc Randolph. Initially, the company offered a subscription-based DVD-by-mail service before transitioning to a streaming model in 2007. Today, Netflix is one of the world’s largest producers and distributors of entertainment content, with a library of original series, films, and documentaries available in over 190 countries. -
Who is Aluma Research and what is their area of expertise?
Aluma Research is a market research firm that specializes in consumer insights and trends related to media and entertainment. The company conducts surveys and focus groups to collect data on consumer preferences and behavior, which it uses to provide insights and recommendations to its clients, including media companies, advertisers, and agencies. -
What are the differences between Netflix’s ad-supported and ad-free tiers?
Netflix’s ad-supported option, called “Basic with Ads,” costs $6.99 per month and includes five minutes of advertising per hour of programming. In contrast, the standard ad-free subscription, which costs $13.99 per month, includes uninterrupted access to Netflix’s entire library of content. The ad-supported option may have a different selection of titles compared to the ad-free tier, and may also have restrictions on simultaneous streaming and video quality. -
What are some of the other major streaming services and how do they compare to Netflix?
Some of the other major streaming services include Amazon Prime Video, Hulu, Disney+, and HBO Max. These services offer a mix of original and licensed content, and may have different pricing models and subscription options. In terms of advertising load, Hulu’s ad-supported tier has the most commercials, with about nine minutes per hour of programming, while Amazon Prime Video and HBO Max currently do not offer any ad-supported options. -
What are Netflix’s plans for its ad-supported option?
Netflix has not publicly disclosed its long-term plans for the ad-supported option, but has indicated that it is`
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