<언론정보학보 Kyung Hee University Professor's Paper
Users Subscribe to an Average of 2.7 OTT Services
Domestic and international online video service (OTT) providers, facing difficulties in securing revenue sources due to increased content supply costs, are focusing on 'advertising plans.' Users who feel burdened by subscription fees also generally show a positive attitude toward ad-supported plans.
According to the June 25 issue of the Korean Journal of Journalism & Communication Studies, a study titled "A Study on the Intention to Switch to Advertising-Based Plans Among Subscription OTT Platform Users," authored by Kyung Hee University professors Sangwon Lee and Hyunjung Son, investigated why Netflix users switch from ad-free plans to ad-supported plans.
Domestic and international OTT providers, facing difficulties in securing revenue sources due to increased content supply costs, are focusing on 'advertising subscription plans.' [Photo by Asia Economy DB]
The research team surveyed 535 adult men and women aged 20 and above online. First, the 'perceived ad intrusiveness,' which refers to subscribers' belief that ads disrupt the flow of content, was found to have a negative impact of -0.37 on switching from existing plans to ad-supported plans.
The researchers explained, "The perceived ad intrusiveness factor causes users to view ads as intrusive and thus avoid them," adding, "Since Netflix's main revenue model has been ad-free subscriptions, users have become quite accustomed to this." Additionally, the 'status quo bias,' which reflects the tendency to maintain the current plan, showed a negative impact of -0.14, lower than perceived ad intrusiveness but still negatively affecting the switch to ad-supported plans.
Despite these two negative factors, many users perceive existing OTT service prices as expensive or unreasonable, leading a considerable number to switch to ad-supported plans. The average number of OTT services used by survey respondents was 2.7, suggesting an intention to reduce their financial burden.
In conclusion, dissatisfaction with existing OTT service prices, status quo bias, and perceived ad intrusiveness were found to have statistically significant effects on switching to lower-priced ad-supported plans.
The researchers stated, "As subscription fees for domestic and international OTTs, including Netflix, have recently increased, users' subscription fee burdens have grown," and added, "This is interpreted as users switching to cheaper ad-supported plans while maintaining the content and platform services provided by existing services."
Contrary to market forecasts that ad-supported plans, which involve the inconvenience of watching ads, would falter, the number of users choosing cheaper plans is increasing.
Netflix, which launched an ad-supported plan in 2022, announced that by November 2023, just one year later, 15 million subscribers worldwide had joined this plan. Among subscribers in countries where the ad-supported plan was introduced, 40% chose to watch ads.
Disney Plus also revealed that from March to September 2023, more than 50% of new subscribers selected the ad-supported option.
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