Purpose: This study assumes that users’ high satisfaction with ad-supported OTT plans isn't solely due to their low cost. It aims to analyze how factors like the quantity and quality of ads, switching barriers (psychological, economic, and technical), and loss aversion based on Prospect Theory affect users’ perceived utility, attitude toward the service, and intention to continue using it. The ultimate goal is to provide practical insights for OTT providers to develop effective ad-supported strategies and maintain a loyal subscriber base.Research design, data, and methodology: This study used a Structural Equation Model (SEM) to analyze user adoption of ad-supported OTT plans. Expanding on the Technology Acceptance Model (TAM), it incorporated core concepts from switching barriers and prospect theory. The research examined how ad avoidance, economic benefits, sunk costs, loss aversion, and switching barriers collectively influence perceived usefulness, which then impacts attitude toward using and intention to use. Data was collected from 20-30 year olds with paid OTT service experience to deeply analyze the interplay of these psychological and economic factors.Results: The study found that economic benefits and sunk costs positively influenced perceived usefulness. In turn, this usefulness was a strong predictor of both attitude toward using and behavioral intention to use. Interestingly, loss aversion did not have a direct impact on perceived usefulness. This suggests that users prioritize concrete economic benefits over vague, negative perceptions of ads. Ultimately, the results show that users accept the trade-off between the cost of watching ads and the benefit of a low-cost subscription plan.Implications: Companies should focus on clearly communicating the economic benefits of ad-supported plans to maximize the trade-off for users. Providing special transition benefits can also help ease the sunk cost burden for existing paid subscribers, attracting both new and old users to the service.
Youngsam Oh (Fri,) studied this question.