With Warner Bros. Discovery having recently confirmed that it will launch in Australia in the first half of 2025, joining the likes of Netflix and Amazon Prime, there is a renewed focus on whether customers are willing to pay a little extra for ad-free streaming plans or if they will instead opt for cheaper ad-supported plans.

A new Parks Associate survey has indicated that the majority of streaming consumers are opting for basic tiers with ads over the more expensive ad-free premium tiers.

The research shows that on average, ad-based tier subscribers account for 57 per cent of the user bases of the eight leading streaming services: Max, Netflix, Disney+, Discovery+, Prime Video, Paramount+, Hulu and Peacock.

However, those subscribers also complain about poor user experiences with long ad breaks and about cycling through the same commercials often.

“Many video streaming services, needing to boost profits, continue to raise prices and have rolled out ad-supported plans to give subscribers options,” said Parks Associates Research Analyst Sarah Lee.

“In many cases, these ad-based tiers are more profitable for businesses, adding urgency to the need to improve the ad experience for their subscribers.”

Approximately one-fourth of current ad-based video on demand (AVOD) subscribers in the survey said they chose the ad-supported plan to save money, while a similar share did so because they were attracted by a bundle or promotion.

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Also, some customers who were unsure of the content offerings of a streaming service, chose the cheaper ad-supported plan as a way to test the service.

The Ad-Based Streaming: Consumer Demand & Engagement,” a Quantified Consumer study covered 8,000 US internet households. “As services continue to raise prices and viewers shift to ad-supported tiers out of necessity, it is critical that services improve the ad-based experience or risk losing subscribers and the ad revenue that comes with it,” said Lee.

In Australia, Netflix, for example, has an ad-supported plan which is its cheapest and costs A$7.99, compared to the similar plan without ads that costs A$18.99 a month, while the top-tier Premium Plan which is also without ads and offers 4K + HDR content is available for A$25.99 per month.

Netflix confirmed that it will launch an in-house advertising technology platform by the end of 2025. Partners that advertisers can use to measure and verify the impact of their campaigns include Affinity Solutions, DoubleVerify, EDO Inc, Integral Ad Science, iSpotTV, Kantar, Lucid, NCSolutions, Nielsen and TVision.

 

As for Amazon, after having introduced ads into its Prime Video offering in Australia in July, the company is now set to increase the number of advertisements shown on its platform.

The company said it had not seen a sharp drop in subscribers since it introduced advertising to its Prime Video platform. Kelly Day, vice-president of Prime Video International, has recently said that the platform’s advertising “load” would “ramp up a little bit more into 2025”. Amazon Prime Video’s ad-supported tier costs A$9.99 per month, while its ad-free tier is priced at A$12.99 per month. Overall, Amazon says that it has a global ad reach of about 200 million — the average monthly potential viewers of ad-supported Prime Video.