The VOD model with ads does not convince the Spanish public and could “cannibalize” the premium customer

Simon-Kucher has published its latest Global Streaming Study, in which it addresses key issues such as the sharing of accounts on video-on-demand (VOD) platforms or the reaction of the Spanish public to ad-supported models, with less permeabilization than in markets such as the United States.

The study of Simon-Kucher identify two types of subscribers who have opted for packages with ads: half who are not bothered by advertising and the other half who chose the package because it was the lowest priced alternative. Netflix, as a pioneer, is committed to attracting new customers to compensate for possible downsells towards cheaper packages. This is stated by the data, with around 60% of subscribers to packages with ads coming from new customers compared to 40% who were downselling. Results opposite to those of the Spanish market, where 60% of the users of the ad-supported package came from more expensive subscriptions within Netflix, highlighting the possible risk of cannibalization for platforms in Spain. As of today, only 11% of Netflix users surveyed and 15% of Disney+ users have the ad package in the United States, a figure that remains at 8% for Netflix subscribers in Spain.

On the other hand, everything seems to indicate that the restriction of shared accounts could end up being positive for video on demand platforms according to the Simon-Kucher study. Globally, 30% of streamers are “free riders” (users with an account but who do not pay for it), with India and the Netherlands leading the ranking with 40%, while in Spain the figure is 31% of users. Regarding the understanding of the elimination of accounts shared outside the home, it varies greatly by country: India is where this movement would be most understandable for users (65%), while Spain would be the country with the least understanding (43%).

If the use of shared accounts outside the home is restricted, the 50% of respondents who do not pay for these services would pay for them, while 30% would not register and the remaining 20% ​​would try to view the content on unofficial sites. In the case of Spain, there are slightly fewer users (41%) who would pay if that privilege were eliminated.

Lisa Jaeger, partner and global director of technology, media and telecommunications at Simon-Kucher, analyzes the main findings of her latest research: "Our most recent study studies in detail the latest strategic moves in the streaming industry, where efforts to attract new subscribers bring associated risks. The launch of ad-supported packages is a good tool to attract new, more price-sensitive subscribers. However, providers must be aware of the possible loss of profitability in a scenario of cannibalization of their own customer base compared to the "Despite the initial reaction of users to the announcement of greater restrictions on password sharing, Netflix ultimately managed to convert a large number of users into paying subscribers. Our findings support that password restrictions can boost profitability."