Just as the SVOD leader confirmed that it has begun testing the idea of inserting promos for its shows and movies between episodes of current programme, Hub Entertainment Research warns that Netflix could face steep subscriber losses for such actions.
In its study, The Future of Monetisation, the analyst gauged consumer reaction to alternatives to the Netflix pay model status quo, including possible price increases and an ad-supported plan. It conducted its survey among 1,612 US consumers with broadband, who watch at least an hour of TV per week.
The overwhelming conclusion was that the subscription video-on-demand faced alienating its customers substantially, especially if ads were included without a reduction in monthly fees.
Hub found that if Netflix raised the fee for its current, ad-free service by $5 or more per month, about a quarter would consider dropping their subscription. A $2 increase would have just a marginal impact with only 8% saying they’d cancel, while at a $5 boost, 23% say they’d drop their subscription and this figure would rise to 28% at a increase of $10 or more.
Looking at scenarios of what would happened if Netflix began including ads during shows, about a quarter of current subscribers said they’d definitely or probably drop the service. Just 41% said they’d definitely or probably keep their subscription, with 37% undecided.
Hub also investigated what would happen if Netflix content included ads, but the subscription fee were $3 less per month. It found that subscribers would be more likely to keep the service, but that losses could still be significant. In this scenario, 16% said they’d cancel their Netflix subscription if ads were included while half of the sample said they’d keep their service under this scenario, but just 25% say they’d definitely keep it.
“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 Future of Monetisation study. “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.”
The overwhelming conclusion was that the subscription video-on-demand faced alienating its customers substantially, especially if ads were included without a reduction in monthly fees.
Hub found that if Netflix raised the fee for its current, ad-free service by $5 or more per month, about a quarter would consider dropping their subscription. A $2 increase would have just a marginal impact with only 8% saying they’d cancel, while at a $5 boost, 23% say they’d drop their subscription and this figure would rise to 28% at a increase of $10 or more.
Looking at scenarios of what would happened if Netflix began including ads during shows, about a quarter of current subscribers said they’d definitely or probably drop the service. Just 41% said they’d definitely or probably keep their subscription, with 37% undecided.
Hub also investigated what would happen if Netflix content included ads, but the subscription fee were $3 less per month. It found that subscribers would be more likely to keep the service, but that losses could still be significant. In this scenario, 16% said they’d cancel their Netflix subscription if ads were included while half of the sample said they’d keep their service under this scenario, but just 25% say they’d definitely keep it.
“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 Future of Monetisation study. “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.”
