If Netflix cut your bill by $3 – but started showing ads – tons of you would still cancel
Netflix, if you’re listening — there are more warning signs that your current dalliance with the ads that you’re not really referring to as ads is a bad idea.
Media research company Hub Entertainment Research is out today with the results of its “The Future of Monetization” study. It shows, among other things, that if Netflix ever goes full-bore into ads, meaning the actual breaking up of content to show ads like on normal TV, the service would lose about a quarter of its subscribers.
Going a little deeper into the numbers associated with that hypothetical, of the 1,612 US consumers with broadband who watch at least one hour of TV a week and who responded to this survey some 41 percent said they’d “definitely or probably” still keep their subscription, even with ads. A little less than 40 percent said they were undecided.
Just as interesting — Netflix customers hate the prospect of ads so much that even if Netflix lowered their monthly bills while adding ads, tons would still cancel. The survey polled respondents about a hypothetical lowering of their Netflix fee by $3 a month. Sixteen percent said they’d still cancel with that lower fee if ads were included.
Worth noting: We don’t have a complete picture of how the survey participants feel about the promos for Netflix content that the service has started showing in a limited experiment. Some viewers have reported seeing, in the midst of a binge session, that as one episode ends Netflix has been playing promos for other Netflix content before the next episode starts. Netflix has confirmed that test and is emphatic that those are not ads (shrug emoji).
Today’s survey results, meanwhile, come about a month after that experiment began, but the survey was completed before that testing. Meaning, we still don’t have much of a scientific feel for what users think about those video promos.
“When we ask subscribers what they consider to be the most attractive features of Netflix, the fact that it’s ad-free consistently ranks toward the top of the list,” said Peter Fondulas, principal at Hub and co-author of the study, in an announcement about the results. “For the moment, that remains a key distinguishing characteristic of the service, especially as other OTT providers attempt to compete with high-quality original shows of their own.”
Among other highlights from the study, Netflix appears to be either at or close to a kind of ceiling it can charge users. They study also found that if Netflix keeps its ad-free model but just raises prices by only $5 a month, about 1 in 4 users would consider dropping their subscription. Raise prices by $10? Almost 30 percent said they’d cancel.
The full study is available here.
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