Is demand for ads on streaming services declining?

As consumers sign up for more a la carte streaming apps and other on-demand TV services, they’re slightly less tolerant, on average, when it comes to watching ads, according to a new study by GroupM, the media investment arm of WPP. The research was conducted in December by GroupM’s Audience Origin (formerly LivePanel) and included 1,000 U.S. consumers.

Respondents to the survey were asked, “If it meant a lower monthly bill for your streaming services, how likely would you accept having to watch commercials?” In the previous survey, 76% agreed. This time, 73% agreed.

The GroupM study also concluded that access to ad-free and ad-light subscription services remained high, consistent with the figures they observed through public filings by streaming service operators.

Why we care. If the number of TV watchers who would tolerate ads for a discount on their services hovers around three quarters, that’s still sizable, and the reason why a company like WarnerMedia introduced an ad-supported version of their HBO Max app last spring.

Read more: 2022 Predictions: CTV and cross-channel advertising

WarnerMedia announced that combined HBO and HBO Max subscribers were at 73.8 million subscribers, but declined to provide a breakdown of how many chose the ad-supported tier of HBO Max, which is priced at $10, as opposed to $15 for no ads.

In an online press appearance, WarnerMedia’s President of Advertising Sales JP Colaco declined to provide the specific breakdown, but said that viewers did “sign up in droves” for the ad-supported tier.

As the streaming landscape continued to mature, ad-supported video, or AVOD, will remain a significant segment.