Advertising is not a viewer turnoff for streamers and the services that have most recently introduced ad-supported tiers get higher grades for their viewing experience, according to a new survey by Hub Research.

According to Hub’s Advertising: Fact vs. Fiction report, 33% of Disney Plus subscribers who have watched a show that included ads said the overall ad experience was “a lot better” than the experience on other ad-supported platforms

Similarly, 32% of HBO Max viewers thought their experience was better, as did 27% of Netflix subscribers. With Hulu, which has been ad-supported for years, 20% said the ad experience was superior. (The survey was conducted prior to HBO Max’s May 23 rebranding as Max.)

By contrast, only 4% of subscribers to traditional pay TV platforms thought the ad experience was superior and 16% of virtual multichannel video programming distributors (vMVPD) subscribers thought there experience was a lot better.

Hub also found that streaming viewers liked having a choice, with 38% saying the preferred a tiered service that let them choose whether or not they would see commercials, compared to 31% who like free, ad-supported services and 31% who like ad-free subscription services.

Services that offer such options can appeal to all consumer segments,  Hub noted.

Even among those who told Hub they can’t tolerate ads, 31% said they’d rather save money if watching ads will cost $4 or $5 a month less than watching ad-free.

Ad-supported streaming services are also giving advertisers a better environment, so long as ad loads and the length of ad breaks are “reasonable.” 

Hub found that 34% of viewers said the paid attention to ads and proms when shows had a reasonable spot load. When the ad load was considered “unreasonable,” those paying attention dropped to 23%. When the length of ad breaks were reasonable, 33% of viewers paid attention to ads and promotions, compared to just 25% when the ad break length was unreasonable.

“Consumers don’t just tolerate advertising in video content, in most cases they actually see benefits from it,” Mark Loughney, senior consultant to Hub, said. “It allows them to choose their preferred video tiers at lower cost, and when presented right, advertising results in a more engaging viewing experience.”

The Hub report is based on a survey of 3,063 U.S. consumers between the ages of 14 and 74 conducted in May.

Instead of killing off TV advertising, streaming is now seen as making it grow as more viewers turn to add-supported connected TV.

Researchers at Advertiser Perceptions and Hub Research teamed up to study CTV from both the consumer and advertiser perspective and found that more viewers accept advertising and media buyers are increasing their spending to reach those viewers.

“The best days of ad-supported TV are ahead of us, not behind us,” said Jon Giegengack, principal at Hub Research. “Significantly more people watch ad-supported than ad-free platforms, and the combination of exclusive content, lower cost and a less disruptive ad experience will keep ad-supported audiences high.”

“Advertisers should get out of their comfort zone and explore all the innovative ways to advertise on CTV,” said Erin Firneno, VP, business intelligence at Advertiser Perceptions. “Publishers can grow the category by promoting their unique offerings, whether that’s scale, unique audience, exclusive content or shoppable ads.”

Also: Watch Giegengack and Firneno discuss their findings in the video below.

Their study concludes that CTV growth isn’t about avoiding ads and that most CTV viewers are willing to watch ads if it will save them money or allow them to watch exclusive content.

Among those who consider themselves tolerant of ads, 72% said they’d watch ad supported TV if it saved them between $4 and $5 a month. Even among those who called themselves ad intolerant, 30% said they’d go with an ad-supported platform over an ad-free version to save $4 to $5.

The more targeted ads enabled by CTV contributed to viewer satisfaction with ad-supported programs. Among those who watched a show on an ad-supported platform 44% said they were highly satisfied, but 60% said they were highly satisfied when the ads were “customized for me.”

A majority of advertisers (54%) said they plan to increase their CTV advertising over the next 12 months.

Most advertisers see CTV in a supporting role in their TV planning, with 51% saying they plan linear TV first. One third said they plan both linear and CTV together and 15% said they plan CTV first. 

Advertisers are buying ads from CTV devices, AVOD services and vMVPDs, but only 32% are buying from all three.

“Advertisers need to test and learn across more of the available platforms – particularly as CTV incorporates more ad formats, from display to interactive ads – and make greater use of personalized advertising. They also need to break-out of their buying silos. Currently, only one in three advertisers buy across all three main inventory sources. Meanwhile, publishers need to differentiate their offerings more thoroughly,” the study concluded. ■

A recent survey from Hub Research revealed that over 50% of Americans make streaming their first stop when deciding what to watch, choosing the streaming stick over the set-top box. This has far-reaching implications for the TV industry as it signals a real sea change in the way people view TV and what the industry might look like in the years to come.

To put this in perspective, even in linear TV’s heyday, only slightly more than 50% of viewers owned a DVR, which was technology supplied to them by their cable companies. (It came bundled with the set top box.)

Streaming, on the other hand, requires a smart TV, a streaming device or both

But what the shift means is that we are going to be seeing a massive change in the way people watch TV and in the way the TV industry is structured.

As “first choice” viewing shifts to streaming, viewers are going to see the seven major SVOD services—soon to be nine when ViacomCBS and Discovery launch their platforms—as their primary option for “lean-in” TV.

While consumers are not going to subscribe to all nine “flixes,” chances are they will have somewhere between one and six, depending on how much TV they watch.

The free ad-supported streaming TV services (FASTs) will be part of this new ecosystem, too, as the key source for “lean-back” TV, the sort of comfort food TV we watch when we just want “something” to watch, rather than something we need to pay close attention to and become emotionally involved in.

The FASTs will take the place of the dozens of smaller cable channels that currently serve as our source of comfort food TV, their programming consisting mainly of reruns of popular TV series and older movies. With FASTs, viewers will be able to watch both curated streams of these types of shows and choose from vast libraries. Tubi, which has the largest library of the FASTs, currently has over 20,000 titles and 50,000 hours of programming.

Once this shift is underway, it won’t take viewers long to realize that they are paying well over $75/month--and often over $100/month, for traditional pay TV packages they rarely watch, which will in turn lead to a significant increase in cord cutting as viewers shift to a diet of subscription Flixes and free FASTs, which will cost them far less on a monthly basis, even if they subscribe to as many as six different services.

We can see this shift already starting to happen as many smaller cable channels are starting to set up shop on the FASTs, bringing their libraries with them in anticipation of the day when more and more viewers give up cable and the move will need to be permanent.

The King Is Dead, Long Live The King

While there are some digital players in this new ecosystem--Netflix, Apple and Amazon--most of the new universe will consist of the same players as the old universe.

Disney (ABC), ViacomCBS, Comcast (NBC) AT&T (Warner) and Discovery will all have a major presence and they will form the bulwark of the new streaming ecosystem.

Chances are good that they will all wind up with some form of the three-tier system NBCU is proposing for Peacock: a free ad-supported service, an ad-supported subscription service and an ad-free subscription service, all at different price points. 

NBCU will use its free services as a way to entice viewers to subscribe to the paid services … without getting too many to take them up on the ad-free service, as the subscription revenue from those services will not equal the lost ad revenue from having a smaller overall audience.

Viewers will be the main beneficiaries here, as there will be many more high quality originals to watch, vast stores of library content available on demand in a way that is easy to search and find, and a considerably lower ad load, along with ads that are much better targeted.

For the programmers, the next few years will be critical, as they all figure out who they want to be when they grow up, so to speak, deciding on the type of programming they want to be known for and the type of audiences they want to appeal to.

We have been predicting this new era for the past 10 years or so, but it seems that the massive change is finally underway. Fortunately, it appears to be a positive change for viewers, for advertisers and for programmers, too.

Consumers staying at home to prevent the spread of the coronavirus are increasing the number of TV providers they use, according to a new study.

The Hub found that the number of homes with a streaming service increased to 78% from 72% last year. And the average household now has nearly five different services including both traditional pay-TV and streaming services, up from 3.7% a year ago and 3 in 2018.

The major streaming services have seen increases in subscribers. Netflix moved up to 63% of homes from 62% a year ago. Amazon say an even bigger jump, rising to 42% from 37%. Hulu increased to 28% from 26%. 

Disney Plus, which launched late last year, is already in 31% of home. Apple TV+ was in 6% of home.

Not all households are sheltering at home, and their behavior is different from those that are, the study found. The difference was even greater when there are kids in the households.

Among those not self-isolating with no kids, 61% had a streaming service. Among those self-isolating 82% had a streaming service. And among those self-isolating with kids at home, 94% had a streaming service.

The average number of streaming services in homes that were not sheltering at home was 2.9. It rose to 5.3 services among homes that were quarantined. Homes with kids had 7 services and homes that were quarantined with kids at home had 7.5 services on average.

Netflix was in 44% of home that weren’t quarantining themselves and had no kids. In quarantined homes with kids, 83% had Netflix. For Disney Plus, the number rose from 13% to 54%. Hulu’s share jumped from 19% to 31% and Amazon rose to 55% from 31%.

“There’s no shortage of recent studies demonstrating that consumers are watching more television as they shelter at home,” said Peter Fondulas, principal at Hub and co-author of the study. “What our study shows is exactly where they’re turning to fill their newly found viewing time—primarily to streaming services that offer a combination of exclusive originals, family-friendly titles, and older shows that can provide a bit of nostalgic solace during this unprecedented and stressful time.”

The Hub conducted its “The Best Bundle Study” by doing 2,000 interviews with U.S. consumers during April.

It’s one of the more interesting debates in video industry research circles right now—new OTT platforms from Disney, WarnerMedia, Apple and NBCUniversal are either walking into opportunity, or a market already saturated with streaming video services.

Hub Research’s latest online survey of 1,631 U.S. video consumers suggests the latter.

According to the firm’s latest survey of video consumers, 24% say they already have too many video services—up from 14% when the Hub’s “The Best Bundle” survey was last conducted in April 2018.

More than one-third of Hub’s survey respondents—36%—said they’d drop a video service or two before adding a new one.

In fact, Hub suggests the average number of subscription video services per home will ebb slightly in 2019, declining to 4.5 per household from 4.6 in 2018.

Last week, another research company, TDG, revealed that only 10% of respondents in a recent survey said they were about to shed a service or two. However, the company said this response isn't directly comparable to Hub's findings. 

Related: Subscription Fatigue is Over-Rated: Analyst

Hub reported the percentage of respondents with pay TV fell an astounding 9 percentage points to 75% from last spring’s survey. Those saying they have Netflix rose slightly, from 61% in 2018 to 62% as of April. Homes with Amazon Prime Video rose from 32% to 37%; and Hulu increased from 18% to 26%.

The share of respondents who reported using at least two of the big three SVOD services increased to 42% from 35%.

More than half of TV viewers -- 52% -- say they watch their favorite shows online, while 48% watch through an MVPD set-top, according to Hub Entertainment Research's annual "Conquering Content" report, published last week.

Hub said this year marked the first time since it began tracking viewing patterns in 2014 that viewers are "more likely to say they watch a recently discovered favorite show from an online source than through their pay TV set-top box."

The report reinforces last week's Parks Associates study that found viewers favor subscription video-on-demand services over virtual MVPD services.

Related: SVOD Services Still Dominate Paid OTT Landscape

Hub noted that cable/satellite set-top box use has "been steadily declining over the past several years." In 2014, 64% of viewers watched their favorite show via an STB (either live, on a DVR or through the MVPD’s video-on-demand platform). At that time, just 31% said they watched their favorite show online (via an SVOD service such as Netflix, Hulu or Amazon, through a network or MVPD site/app, or through other online sources like iTunes).

The past year saw a 12% jump (from 40% to 52%) in the online viewership preference.

“These findings suggest that the aggressive investment SVODs are making in original and exclusive content is paying big dividends,” said Peter Fondulas, co-author of the study and principal at Hub. “In this research and other recent studies, we see clear evidence that high-profile online exclusives generate buzz that draws consumers to these platform, which not only helps attract brand new subscribers, but also builds loyalty among current customers.”

Hub's Jon Giegengack, co-author of the study, characterized the SVOD companies as transforming themselves "from technology companies that distribute content, into entertainment companies that create it."

Giegengack also observed that the amount of new content "is greater than the disposable time available to watch it." He predicted that in the future, "the share of total TV time may turn out to be a more important way to evaluate platforms than looking at the number of subscribers.”

Hub conducted its research in October among 2,214 U.S. consumers with broadband access who watch at least five hours of TV per week.