According to a study by advertising platform LoopMe, more than a third of British people said they would cancel their subscription if Netflix was funded with advertising.
Of the 2,992 consumers surveyed, 21.4% said they would keep Netflix if they had skippable ads, but more interestingly, no one chose to show relevant ads as an option to keep Netflix funded for advertising.
LoopMe’s study was published in response to news from Netflix CEO Reed Hastings that streamers will adopt ads in a year or two. A third said they would give up Netflix, and a slightly lower 33% said they would tolerate advertising for a cheaper monthly subscription.
The data also supported Netflix’s password-sharing problem. Only 14% of people signed up for a streaming service, but 1 in 2 confirmed they use Netflix.
The study reflected insights found by Kantar in April, with 1.5 million Britons canceling SVOD in the first half of this year, showing a link between cost of living and cancellation of subscriptions. LoopMe found that nearly half (47%) of consumers cite economics as the main reason for canceling a streaming service, and 1 in 10 (9%) had already canceled their subscription in the past month. Of those 47%, 55-64 demos were the most likely to abandon their subscription for cost reasons.
The second reasons for canceling streamers were lack of good content (29%), presence of ads (8%), and unrelated ads from streamers (5.6%) as the second reason they had to leave the streamer.
Sarah Rew, Senior Director of Global Marketing at LoopMe, said: It is clear that Netflix will have to consider the economics going forward, with the potential to deliver content at a lower cost through its ad-funded model.”
Rew warned that Netflix, which finances advertising, may not be enough to retain or attract new customers. “Netflix should focus on providing quality content that is relevant in terms of programming and advertising, with a full understanding of how brand advertising can enhance products rather than compromising the experience,” she said.
Rew’s insights reflect the broader advertising industry narrative that Netflix must release unobtrusive ads to retain subscribers.
Earlier this week, GroupM’s global director Simon Thomas said that Netflix would take the big risk of introducing ads. “If it’s too aggressive, you risk offending some subscribers, or the quality level is so low that it’s going to be a tipping point that people leave,” said sajd Thomas. “That’s the balance lead. [Hastings, Netflix chief executive] have to make it.”
Check out the future of TV Hub and subscribe. Newsletter here. Listen to the TV Talks podcast here.