Despite the fact that they’ve continuously raised their monthly subscription price over the past several years, Netflix remains the top service Gen Z and Millennials use to watch content weekly (though TikTok is catching up). But as their user numbers dropped over the last year, returning (and hopefully new) viewers are being presented with a cheaper option that comes with a catch: ads. (Also known as Gen Z’s greatest eye-sore.) The streaming giant rolled out a lower-price ad-supported tier a few weeks ago, and while a lower subscription price could appeal, YPulse research shows that 68% of 13-39-year-olds agree that they use streaming services to avoid ads, and 77% say streaming services are worth the money.
As it is, YPulse’s Media Consumption Monitor report shows more than half of young consumers are currently paying for streaming services, but that number has dropped from a year ago; in 2021, 65% of young people were paying for an online streaming account, compared to 54% now. And because they’re paying for an average of three at once, the price of these services adds up: young people tell YPulse they spend an average of $40.29 a month on premium video streaming.
With prices constantly rising, though, streaming services are at risk of losing young viewers. In fact, when YPulse asks Gen Z and Millennials how they would change their spending habits should we enter a recession, 35% say they would cut back spending on streaming services. But that doesn’t mean they have to get rid of them—now, most streaming services offer a subscription tier at a significantly lower price if viewers are willing to watch ads.
How many young people are really willing to make the ad sacrifice, though? They’ve grown accustomed to uninterrupted content on their favorite streaming platforms, but when YPulse asks 13-39-year-olds if they’re interested in using streaming services with ads for lower prices, it’s looking like a viable option for many:
Young consumers are willing to watch ads for a better price
The majority of Gen Z and Millennials tell YPulse they’d be willing to watch ads for a lower cost on their streaming services. And not only are 39% of young consumers interested this option, 29% say they’re already using an ad-supported streamer. YPulse data shows a significant number of young people are using platforms that offer ad tiers like Hulu (29%), Amazon Prime Video (33%), HBO Max (23%), and Paramount+ (16%) on a regular basis.
Netflix is seemingly the last to add ads to retain young subscribers (or gain new ones), and the new ad-supported tier is cheaper than they’ve ever offered their service for. Disney, who has outpaced Netflix in overall subscriber count, is also set to release an ad tier on Disney+ next month, keeping up with variety of options while raising the price for their standard ad-free tier. YPulse data shows 40% of young people use Disney+ weekly or more often, making it their second top source of video entertainment
Nearly one third of young consumers say they are not willing to watch ads, though. Given that streaming was once made to take away the pitfalls of cable TV—commercials and waiting for new episodes—some young consumers are not willing to take step backward in content consumption. Even though their favorite social video platforms TikTok and YouTube run ads between (and in the middle of) videos, these platforms are entirely free, and it seems they expect ones they pay for to meet a different standard.
Millennials and Millennial parents are most interested in these options
Though young people overall are currently using streaming services with ads at the same rate, Millennials and Millennial parents who aren’t are most interested in paying less for a tier with ads included. Forty-one percent of Millennials and 46% of Millennial parents say they’re interested in streaming with ads for a lower price, compared to 36% of Gen Z. The older gen is +13pts more likely to be paying for these platforms, as many young Gen Z are still living at home or sharing an account with their family (perhaps why they’re not so interested in saving money with ads). As adults, they’re always trying to save where they can—and a few ads seem to be worth it.
Millennial parents especially lean on streaming to entertain their young kids: 61% of parents say they pay for online streaming accounts, compared to 50% of non-parents. Their kids are watching tons of video content on these platforms—Netflix and Disney+ especially. Being that until recently these were the only two of the only services who didn’t offer an ad tier, Millennial parents may be the first to jump at the new subscriptions.