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How do Gen Z & Millennials feel about Ad-Supported Streaming?

Ad supported Streaming services

The world of streaming services has undergone a paradigm shift, especially for young consumers. Netflix, a dominant source of video content for Gen Z and Millennials, has responded to rising subscription costs by introducing an ad-supported tier. Despite consistently hiking monthly fees, Netflix remains the preferred streaming platform for Gen Z and Millennials, though TikTok is rapidly gaining ground. However, the platform witnessed a dip in user numbers over the past year, prompting the rollout of a more budget-friendly option that comes with a caveat – advertisements. While the reduced subscription price might appear enticing, YPulse research reveals that 68% of individuals aged 13 to 39 use streaming services precisely to escape ads, and 77% believe streaming services justify their cost.

The Media Consumption Monitor report by YPulse underscores that over half of young consumers presently subscribe to streaming services, albeit a decline from the previous year when 65% held online streaming accounts, now resting at 54%. These individuals are simultaneously paying for an average of three services, culminating in an average monthly expenditure of $40.29 on premium video streaming.

As streaming prices persistently escalate, the industry faces the risk of losing its younger audience. In response, most streaming platforms now offer a more affordable subscription tier if users are willing to tolerate ads. The question, however, remains: How many young people are willing to make this trade-off? Despite being accustomed to uninterrupted content, a substantial portion of Gen Z and Millennials view ad-supported streaming as a viable option:

Why the preference for Ad-Supported Streaming

Interest in Watching Ads for Lower Cost: A significant majority of Gen Z and Millennials express willingness to endure ads in exchange for a reduced streaming cost. A notable 39% of young consumers find this option appealing, with 29% already using ad-supported streaming services.

Popular Ad-Supported Platforms: Platforms offering ad tiers such as Hulu (29%), Amazon Prime Video (33%), HBO Max (23%), and Paramount+ (16%) have garnered a strong following among young users, showcasing their acceptance of this model. While Netflix has been the latest to introduce ads in order to retain or attract young subscribers, other competitors like Disney+ are also adopting similar strategies. Disney, boasting higher subscriber counts than Netflix, is gearing up to launch an ad-supported tier while simultaneously raising prices for its standard ad-free offering. With 40% of young people frequently using Disney+, it stands as their second most preferred source of video content.

Some are still not too keen

However, a considerable portion of young consumers, around one third, remain averse to the idea of watching ads. The emergence of streaming was designed to counter the inconveniences of cable TV – advertisements and waiting for new episodes. Consequently, some young viewers are reluctant to revert to this model. Although platforms like TikTok and YouTube include ads in their content, they offer their services for free, setting different expectations for platforms they pay to access.

Generational Divides in Ad-Supported Streaming Preferences

Interestingly, there is a generational divide in the attitude toward ad-supported streaming. Millennials and Millennial parents, who aren’t currently using such services, exhibit the highest interest in embracing ads for a reduced subscription price. Among them, 41% of Millennials and 46% of Millennial parents express interest in this option, compared to 36% of Gen Z. Millennials, who tend to be paying consumers, are more likely to opt for such ad-supported platforms. Millennial parents particularly rely on streaming to entertain their children, with 61% of parents subscribing compared to 50% of non-parents. Platforms like Netflix and Disney+ have been especially popular among their kids. With the advent of ad-supported tiers on these platforms, Millennial parents are likely to be at the forefront of this new subscription model.

In short

Thus, the landscape of streaming services is undergoing a transformative phase, influenced by Gen Z and Millennials’ preferences and economic factors. While a substantial portion of these young viewers are open to ad-supported streaming as a means to lower costs, there remains a significant faction that clings to the ad-free experience they’ve grown accustomed to. The streaming industry’s response to these changing preferences, as well as the willingness of young consumers to embrace ads, will continue to shape the future of entertainment consumption.

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