With Netflix and Disney Plus just months away from launching ad-supported versions of their respective streaming services, Kagan, the media-research arm of S&P Global Market Intelligence, says that lower prices and more ads may just encourage current ad-free customers to switch to the more economical tiers. 

Kagan surveyed about 2,519 streaming service subscribers and found that 60% to 70% of customers of Hulu, Peacock Premium, Discovery Plus and Paramount Plus already subscribed to the ad-free tier. Only about 43% of HBO Max customers subscribe to the ad-supported tier, but that may be because it is only a few months old. HBO Max launched its ad-supported tier in June 2021.

According to Kagan, while about one-third of those ad-supported customers lived in households with less than $50,000 in annual income, 25% to 40% lived in homes where annual incomes were $100,000 or more. 

“Given the popularity of ad-supported plans, operators such as Disney and Netflix that are launching ad-supported plans may not see a mass influx of new subscribers and could instead see a sizable number of existing subs switch to ad-supported offerings,” Kagan senior research analyst Seth Shafer wrote in the report. 

Disney Plus is expected to launch its ad-supported version on December 8,  and Netflix has said it plans to do the same before the end of the year.  Netflix had its first ever quarterly streaming subscriber loss in Q1 (200,000 customers) and in Q2 lost about 1 million streaming customers. The belief is that as the number of streaming services grows, consumers are gravitating toward ad-supported tiers to keep tier monthly costs down. But in the Kagan report,  Shafer wrote that it may just come down to each service being different.

“A case could be made that Netflix and Disney Plus are simply ‘different’ when it comes to ad viewing preferences — Netflix, due to the fact that it has been an ad-free haven for its entire existence and Disney Plus, due to some parents seeking to keep children from being exposed to ads on the service,” Shafer wrote. “While those factors could slightly reduce levels of ad-supported subscribers for Netflix and Disney Plus relative to other services, survey data suggests that a sizable number of new and existing subs for both Netflix and Disney+ will opt for ad-supported tiers.” 

Kagan found that a large percentage of ad-supported users at other streaming services are also subscribers to Netflix and Disney Plus. According to the company, 82% of Hulu, 84% of HBO Max, 79% of Discovery Plus, 78% of Paramount Plus and 66% of Peacock Premium ad-supported subscribers also subscribe to Netflix. Between 42% and 64% of customers of those ad-supported services also subscribe to Disney Plus, according to Kagan.

The researcher added there was little “crossover behavior” between ad-supported and ad-free tiers, meaning that when given the choice, ad-supported customers tend to stick with that tier with other services. 

“Using Hulu and HBO Max as examples due to their larger respondent base sizes across multiple services, ad-supported viewers at those two services tended to select ad-supported tiers when they used other services,” Shafer wrote. “Ad-free viewers were also generally more likely to select ad-free tiers at other services but the tendency was less apparent when compared to ad-supported users opting for other ad-supported offerings.” ■ 

CBS made good on its promise to offer customers a commercial-free option for its over-the-top service CBS All-Access, rolling out the offering for $9.99 per month on Wednesday.

CBS joins Hulu, which launched its commercial-free option last September and makes good on a promise chairman and CEO Les Moonves made earlier this year to offer an ad-free version of All Access. At $9.99 per month the CBS offering is lower priced than Hulu's $11.99 monthly fee for its ad-free version. The basic CBS All Access service, replete with commercials, still costs $5.99 per month.

“The foundation of CBS All Access is not only about giving CBS fans access to more of the content they want, but also giving them more choice in how they watch their favorite CBS programming,” said CBS Interactive president and chief operating officer Marc DeBevoise in a statement. “The addition of a commercial-free plan gives our subscribers even more ways to customize their CBS viewing experience – from which devices to whether they watch in or out of the home, and now with commercials or without.” 

With the commercial-free plan, subscribers will be able to watch CBS All Access’s on-demand library of more than 7,500 episodes, including full current seasons of primetime hits like Big Brother, Blue Bloods, Madam Secretary and The Odd Couple among many others, as well as late night, daytime and news programming, all without commercials. CBS All Access’s upcoming original series, including the next chapter of the legendary Star Trek TV franchise, Star Trek: Discovery, a spinoff of The Good Wife and a new digital edition of Big Brother will also be available commercial-free under the $9.99/month plan. 

Subscribers to the $5.99/month plan will continue to experience reduced commercials when watching on-demand content and be able to watch CBS Classics without commercials. Current subscribers will have the option to move to the commercial-free plan by logging on to their account through CBS.com. 

But commercial-free doesnb’t necessarily mean ad-free for all content. CBS said subscribers to the $9.99 plan will still have to watch commercials in live streaming content nof local CBS TV stations and select on-deman shows will still include promotional interruptions.

CBS All Access is available online at CBS.com, on mobile devices and tablets via the CBS App for iOS, Android and Windows 10, and on Roku Players, Apple TV, Xbox One, Xbox 360, Chromecast, Android TV, Amazon Fire TV and Fire TV Stick, with more connected device platforms coming soon. 

CBS could follow online video pioneer Hulu with an ad-free version of its own over-the-top service CBS All Access, charging an additional $4 per month on top of the $5.99 monthly fee the broadcaster gets for the offering.

On a conference call with analysts to discuss fourth quarter results, CBS chairman and CEO Les Moonves said nothing is carved in stone, but that the company is considering offering an ad-free version of CBS All-Access.

“We’re exploring it,” Moonves said on the call. “We’re not there yet.”

He added that the ad-free offering “hasn’t worked quite well” for Hulu so far.

Hulu launched the ad free version in September, charging an additional $4 per month on top of its $7.99 monthly charge for the service.  The online service continues to offer its original service which includes ads for $7.99 per month.

CBS launched CBS All-Access in October 2014, and Moonves said the service received a boost in customers after it aired a commercial during the Super Bowl.  Although CBS would not say how many customers the service has, it did say that it is attracting a younger demographic.

CBS has been developing new programming for the All Access service – its new Star Trek television series will appear exclusively on the service after its first episode debuts in January 2017 on the broadcast network. Moonves added on the call that its own CBS Studios could create additional programming for the OTT service.