Your tolerance for TV advertising varies based on what type of shows you watch, and that has big implications for Netflix
- There is generally a split between ad-supported and ad-free streaming TV in the US, with ad-free services like Netflix and HBO dominating.
- Some services, like Hulu, offer both options, but new research from Deloitte suggests it could be beneficial for companies look at ads more granularly - down to the genre level, in fact.
- Researchers at Deloitte polled 2,000 US consumers about their streaming habits and ad tolerance and found people's ad tolerance differed depending on the type of TV they enjoyed.
- Those who favored talk shows had a much higher tolerance for ads than those who preferred comedies, dramas, or news.
- Jeff Loucks, one of the coauthors of the study, said the survey suggested there could be a shift from ad-free SVOD services to ad-supported AVOD services in the US.
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There's a stark split between most TV streaming services when it comes to advertising: for or against.
Netflix, for instance, is known for being completely ad-free and has said it intends to keep it that way. HBO, Showtime, and Starz also don't have advertising.
Some services have implemented both ad-supported and ad-free models, most prominently Hulu.
But new research suggests that streaming services should start looking even more granularly at advertising - down to the genre level - as consumers vary in their tolerance for ads based on the type of shows they like to watch.
A new survey from Deloitte, which polled 2,000 US consumers about their streaming habits, showed respondents had the highest tolerance for advertising when their most-watched type of show was talk shows (11.6 minutes per hour), and the lowest when it was scripted comedies or dramas (7.2 minutes) or news (6.7 minutes).
And though ads can be disruptive, consumers generally accepted the exchange between ads and content, according to the study.
"Consumers are fairly flexible about the way they get video," said Jeff Loucks, the executive director of Deloitte's Center for Technology, Media, and Telecommunications and a coauthor on the study. "That gives some business model flexibility."
But the ad loads on traditional TV were still way out of step with consumer preference, the survey found.
"On regular, paid TV, an hour-long drama is going to have about 42 minutes worth of content and 18 minutes worth of ads," Loucks said. "Consumers move to streaming services to avoid that ad load."
Here's what respondents said was the right amount of advertising based on which genre they watched most frequently:
- Talk Shows: 11.6 minutes per hour
- Reality TV: 9.1 minutes per hour
- Sports: 8.7 minutes per hour
- Children's shows: 8.6 minutes per hour
- Movies: 8.3 minutes per hour
- Contest shows: 8.2 minutes per hour
- TV sitcoms and dramas: 7.2 minutes per hour
- News: 6.7 minutes per hour
Shayanne Gal/Business Insider
Shayanne Gal/Business Insider
Shifting from SVOD to AVOD
Even some of those sitcom and drama fans who used SVOD services to avoid interruptions said they would be open to interacting with ads in exchange for lower subscription prices. 70% of those polled by Deloitte said they would watch ads in exchange for a subscription fee reduction.
"We think that even here [in the US] there's room for ad-supported video," Loucks said. "People are willing to watch ads, but they can't be too repetitive and they've got to be targeted."
Still, SVOD is the dominant streaming model in the US, with huge portions of streaming service budgets being used to produce original content, Loucks said. AVOD is more popular in countries such as China and India. Many AVOD services in these countries have completely free options or subscription tiers that are supported by ads.
"We think that there's going to be more of a shift toward that in the US," Loucks said. "Ad-supported video streaming services, we think, have a bright future in the US market."