Paid on demand services are becoming increasingly popular in the Czech Republic and viewers would not stop using them even they were to introduce advertising.
However, according to the findings of the latest atmedia index, they would expect to pay lower subscription fees in such an instance.
According to Pavel Müller, head of research and marketing at Atmedia, “services such as Netflix, HBO Max or Voyo are ad-free in the Czech Republic and offer their video content to viewers for a subscription. However, in connection with the saturation of some foreign VOD markets, global players are approaching a new model – in addition to subscriptions without ads, they offer or will also offer cheaper versions of subscriptions with a certain amount of advertising”.
In the study, undertaken in Q3 this year, it was found that 56% of users of paid VOD services would not stop using them even if they introduced adverting, Of this 56%, two-fifths would not stop using paid VOD services with advertising if their price were at least 50% lower than at present, another two-fifths would not stop using them if the subscription price was reduced by at least 75%. Others would demand at least a 25% discount, or they would use paid video services even if they newly included advertising and at the same time their price was the same as at present.
The results of the atmedia index showed that for 44% of users of paid VOD services, the absence of advertisements is so important that they would stop using these video services if they included advertising. However, as Müller pointed out, there can be a difference between the declaration and the real behaviour of users, and he added: “it also depends on how individual paid VOD services would work with advertising space. With a larger volume of advertising, the willingness to pay for these services would decrease, with a smaller volume of advertising and a higher subscription discount, the opposite. In today’s context, the high rate of inflation can also speak to this, when people are looking for ways to save”.
The results of the atmedia index also show that users in younger age categories are more open to advertising on paid VOD services. For example, 71% of those aged 15-24 would not stop using paid VOD services if they included advertising. In other age categories, the willingness to pay for video services even with advertising decreases and ranges from 47% to 56%. In addition, for all age categories, if paid VOD services were to include advertising, the subscription would have to be lower than at present. “The results of the atmedia index showed a certain correlation – the greater the subscription discount, the greater the willingness to watch video content with advertising. And the older the user, the less willingness to consume advertising”.
Michaela Surakova, Atmedia’s MD, pointed out that VOD players can choose different strategies to reach as many customers as possible. “HBO Max, Discovery+ or Netflix in some foreign markets offer multiple types of subscription – for example, a full plan without ads and then a cheaper plan with ads. In this way, they can appeal to both those who want to watch video services without ads and those for whom a lower amount for using these services is more important”.
In this context, she further pointed out that by launching a cheaper tariff with advertising, individual players can acquire new subscribers and at the same time build a more stable user base. She referred to a specific example of HBO Max, which launched its plan with advertising in some markets in June 2021. “Data from the American research company Antenna shows that the user base of the cheaper plan with advertising on HBO Max consists of 44% of new customers and 27% of original customers who previously unsubscribed from the service only to return to it precisely because of the cheaper tariff”.
