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GMAT Club Olympics 2024 (Day 8): A leading streaming service company

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Bunuel

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A leading streaming service company has introduced a new pricing tier that allows users to watch shows and movies with advertisements at a reduced cost. The company is concerned that this cheaper ad-supported tier might lead to a significant decline in subscriptions to its more expensive, ad-free service. To mitigate this, the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.

The company's plan assumes that:

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

(D) Most current subscribers to the ad-supported tier consider the price difference between the two tiers to be prohibitively large.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

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Bunuel

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Bunuel

A leading streaming service company has introduced a new pricing tier that allows users to watch shows and movies with advertisements at a reduced cost. The company is concerned that this cheaper ad-supported tier might lead to a significant decline in subscriptions to its more expensive, ad-free service. To mitigate this, the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.

The company's plan assumes that:

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

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GMAT Club Official Explanation:

Correct Answer: B. The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

B) tells us that by restricting access to popular content to only the ad-free tier, the company can effectively incentivize subscribers to opt for or remain on the more expensive plan. It presumes that this exclusive content is compelling enough to influence subscription choices, directly impacting the plan's effectiveness.

A. Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

(A) suggests that the absence of ads, not content exclusivity, is the main draw for the ad-free tier. It contradicts the premise needed for the company’s plan to work effectively. This is not the company's assumption. Eliminate.

C. The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

This answer choice does not directly impact the argument. If the company assumes that the ad-supported tier will not increase the total number of subscribers, it could mean that they are not expecting new customers to sign up but it does not say anything about existing customers switching. This answer choice is incomplete and does not support the argument. Eliminate

D. Most current subscribers to the ad-supported tier consider the price difference between the two tiers to be prohibitively large.

(D) is a trap choice. It is talking only about the ad-supported tier of subscribers. We are not concerned about this group upgrading but rather about the paid group downgrading. Also, we do not know how large this group is and whether these are people just signed up or downgraded to this new plan. This is a trap choice designed to make you think that paying customers will defect to the ad-supported plan. However, while this tier subscribers may not upgrade to the ad-free tier, we do not know if the ad-free subscribers share the same sentiment to downgrade. Eliminate.

E. Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

(E) The plan is not concerned about the competitors - it is concerned about cannibalizing their own customers who may switch from the paid to ad-supported tier and thus this answer choice is irrelevant. Eliminate.

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A leading streaming service company has introduced a new pricing tier that allows users to watch shows and movies with advertisements at a reduced cost. The company is concerned that this cheaper ad-supported tier might lead to a significant decline in subscriptions to its more expensive, ad-free service. To mitigate this, the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.

The company's plan assumes that:

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content. => It is the other way around.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers. CORRECT => People would pay more for most popilar original content

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service. => The opposite is the case.

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large. => Not true. Otherwise they would all choose the ad-free service.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans. => Not relevant

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(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

This option suggests that the main reason subscribers choose the ad-free tier is to avoid advertisements, regardless of exclusive content. However, the company's plan focuses on restricting popular original content to the ad-free tier, implying they believe exclusive content will drive subscribers to this tier. This option is not directly assumed by the company's plan.
(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

This option directly aligns with the company's plan. By restricting popular original content to the ad-free tier, the company assumes that users will be motivated to choose the more expensive ad-free tier to access this content. Therefore, this is a key assumption underlying their strategy.
(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

This option suggests that despite the cheaper ad-supported tier, it won't attract a significant number of new subscribers. While this could be an assumption, the company's plan is more focused on retaining existing subscribers and encouraging them to upgrade, rather than addressing the overall subscriber growth.
(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.

This option addresses the perception of price difference between the ad-supported and ad-free tiers among current subscribers. It's not directly related to the assumption behind the company's plan to restrict popular content to the ad-free tier.
(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

This option considers the practices of other streaming services regarding premium content availability. While it provides context, it doesn't directly impact the assumption made by the streaming service company regarding their own strategy.

Ans B

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17 Jul 2024, 07:58

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Bunuel

A leading streaming service company has introduced a new pricing tier that allows users to watch shows and movies with advertisements at a reduced cost. The company is concerned that this cheaper ad-supported tier might lead to a significant decline in subscriptions to its more expensive, ad-free service. To mitigate this, the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.

The company's plan assumes that:

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

This question was provided by GMAT Club
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reasoning :
A leading streaming service company has introduced a new pricing tier that allows users to watch shows and movies with advertisements at a reduced cost. The company is concerned that this cheaper ad-supported tier might lead to a significant decline in subscriptions to its more expensive, ad-free service

conclusion :
To mitigate this, the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.

use negation :

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, necessarily for exclusive content.
no impact

(B) The availability of popular original content will not be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.
weakens the conclusion

(C) The reduced cost of the ad-supported tier will significantly increase the total number of subscribers to the streaming service.
not relevant as not in line with conclusion

(D) Most current subscribers to the ad-supported tier do consider the price difference between the two tiers to be prohibitively large.
not relevant

(E) Other streaming services do offer their premium content to subscribers of their lower-priced, ad-supported plans.
does not weaken the conclusion

OPTION B is correct

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17 Jul 2024, 08:03

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The price will bd a decisive factor hence that forms the basis od assumption.

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17 Jul 2024, 08:10

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Bunuel

A leading streaming service company has introduced a new pricing tier that allows users to watch shows and movies with advertisements at a reduced cost. The company is concerned that this cheaper ad-supported tier might lead to a significant decline in subscriptions to its more expensive, ad-free service. To mitigate this, the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.

The company's plan assumes that:

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

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Conclusion: To mitigate significant decline in subscriptions to its more expensive ad free subscription; the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.

A Then it would not have to mitigate the decline. INCORRECT.
B CORRECT. If availability of popular original content will not be a decisive factor for many users then it would break the conclusion.
C Does not affect the conclusion.
D Even if they consider that will not stop them buying the ad free tier if they like the popular orig content.
E Irrelevant.

IMO B

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17 Jul 2024, 08:12

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A leading streaming service company has introduced a new pricing tier that allows users to watch shows and movies with advertisements at a reduced cost. The company is concerned that this cheaper ad-supported tier might lead to a significant decline in subscriptions to its more expensive, ad-free service. To mitigate this, the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.

The company's plan assumes that:

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content. -> Prolly opposite, def not this.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers. -> This is good, it goes in line with their thought and conclusion, it bridges the gap

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service. -> Irrelevant, we aren't concerned about it, the stimuli mentions that we are concered the ratio of subscribers to add-free/vs ad, not this.

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large. ->Irrelevent, we aren't concerned about others.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans. -> Irrelevant, we aren't concerned about others.

Answer : B

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(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

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To solve this problem, we need to identify the underlying assumption in the company's plan to restrict access to its most popular original content exclusively to subscribers of the ad-free tier. This plan is intended to prevent a significant decline in subscriptions to the more expensive, ad-free service.

The assumption must be a condition that must be true for the company's plan to work as intended.

Let's analyze each option:

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

This option suggests that avoiding ads is the main reason for choosing the ad-free tier, but the company's plan hinges on the attractiveness of exclusive content.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

This option suggests that users value the exclusive content enough to choose the ad-free tier over the ad-supported tier. This directly supports the company's plan, making it a critical assumption.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

This option concerns overall subscriber numbers, but the company's plan focuses on the distribution of subscribers between tiers, not the total number.

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.

This option addresses current subscribers' perception of price difference, but it does not directly relate to the effectiveness of restricting access to popular content.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

This option compares the company's practices to competitors', but the plan's success does not depend on competitors' strategies.

Based on this analysis, the most critical assumption that supports the company's plan is: B
Ans: B

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17 Jul 2024, 08:15

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Company's assumption is option B

Content is the deciding factor, if not then the argument fails.

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17 Jul 2024, 08:29

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The answer is (B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.
While Option A is contradictory to the conclusion of the para, Option D and E can't be concluded from anywhere from the question.
And as far as Option C is concerned, the question focuses more on the migration of people from more expensive service to less expensive one and not how total number of subscribers may increase in total.

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17 Jul 2024, 08:42

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Quote:

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

If subscibers do not primarily choose the ad-free tier to avoid advertisements but necessarily for exclusive content, then the statement provides support for the conclusion that the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.
When the assumption is negated, the conclusion DOES NOT fall apart.
Incorrect.

Quote:

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

If the availability of popular original content will NOT be a decisive factor for many users when choosing between the ad-supported and ad-free tiers, then the conclusion that "the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier. " falls apart.
If the assumption is negated, the conclusion falls apart.
Correct

Quote:

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

The argument is NOT concerned with increase in the total number of subscribers to the streaming service.
Incorrect

Quote:

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.

If most current subscribers to the ad-supported tier consider the price difference between the two tiers to be prohibitively large, then the conclusion that "the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier. " is not completely affected since subscribers of the ad-free tier may still opt for the subscription because of access to its most popular original content exclusively to subscribers of the ad-free tier
Incorrect

Quote:

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

The conclusion is NOT affected by the statement that "other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans. " The statement provides additional support to the conclusion.
Incorrect
Incorrect

IMO B

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17 Jul 2024, 08:49

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(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

If this is true, then the company's plan to restrict popular original content to the ad-free tier might not be effective. Subscribers might choose the ad-free tier simply to avoid ads, regardless of the exclusive content. This assumption undermines the company's plan because it indicates that the availability of exclusive content is not the primary driver for choosing the ad-free tier.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

This assumption supports the company's plan. If users are highly motivated by the availability of popular original content, then restricting this content to the ad-free tier will likely encourage users to maintain or upgrade to the more expensive tier.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

If the cheaper ad-supported tier does not significantly increase the total number of subscribers, the company might not experience a substantial increase in overall revenue from this tier. This assumption suggests that the introduction of the ad-supported tier may not pose a significant threat to the subscription numbers of the ad-free tier.

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.

If this assumption is true, then it might be easier for the company to persuade ad-supported tier subscribers to switch to the ad-free tier for exclusive content. The perceived value of the content might outweigh the cost difference, thus supporting the company's strategy.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

If this is true, it implies that the company's strategy of restricting premium content to the ad-free tier is in line with industry standards. This could help the company maintain a competitive edge and ensure that users who value premium content are more likely to subscribe to the ad-free tier.

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17 Jul 2024, 08:51

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The company's plan involves offering ad-supported content at a lower cost but restricting popular original content to the more expensive, ad-free tier.

A) a weak weakener
B) Assumption! company believes that by making popular original content exclusive to the ad-free tier, it can prevent a significant drop in subscriptions to that tier
C)This is related to the plan but not the primary assumption.
D) not related to plan
E) What other services do is irrelavant

B)

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17 Jul 2024, 08:52

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Bunuel

A leading streaming service company has introduced a new pricing tier that allows users to watch shows and movies with advertisements at a reduced cost. The company is concerned that this cheaper ad-supported tier might lead to a significant decline in subscriptions to its more expensive, ad-free service. To mitigate this, the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier.

The company's plan assumes that:

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.

This question was provided by GMAT Club
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In the text, it said that "The company is concerned that this cheaper ad-supported tier might lead to a significant decline in subscriptions to its more expensive, ad-free service. To mitigate this, the company plans to restrict access to its most popular original content exclusively to subscribers of the ad-free tier." so they think that their most popular original content is their selling point and subscribers are paying money to get access to that with or without the ads, hence, they try to maintain the number of subscribers by limiting this access so that people still have to chip in. => B

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17 Jul 2024, 08:57

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Company allows users to watch and stream with adv at reduced costs.
Company concern -> Cheaper ad supported tier -> decline in subsctiption to expensive tier.
Conclusion to mitigate this company retricts access to exclusive content to ad-free tier.
We need to make sure the assumption supports the conclusion for the argument to make sense.

A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.

We do not have sufficient information about subscriberschoosing ad-free tier, what we know is that they get this at reduced cost.
So this statement does nothing tot he conclusion.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.
This statement states that the availability of original content will be a factor important for the users.
Let us negate this statement: If availability of popular original content is not a decisive factor then the conclusion that that restricting access will not work. Hence the argument falls apart.
So this is the correct answer.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.
This statement does nothing to the conclusion. Hence Eliminate

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.
This statement does not affect the conclusion. It can be called a mere strengthener. Hence eliminate.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.
Another classic GMAT trap, we do not need to know what other services are doing. This does not help the conclusion. Hence eliminate.

Quote:

Summary : Options C,D,E were easy eliminations. A and B could have taken time, yet we could see B is the best option if we apply the negation test of choosing assumption. Already described above.

Ans is Option B

Fido10

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17 Jul 2024, 09:01

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The plan of the company is to restrict access to its most popular original content exclusively to subscribers of the ad-free tier in order to help decline in subscriptions to its more expensive, ad-free service

(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.
If this is the case, then the plan of the company would hane no sense. Why restricting the content to the payable version if people are coming to it exclusivey for the add-free, False
(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.
This is true, if the original poular content is not decisive, then the plan of the company would not be still valid. Simply because, the plan based its strategy on the exclusivity on original programs it offers, if this exclusivity parameter is gone, then the plan wouldn't be effective
(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.
This is a good reason to assume for the company, but it is not Mandatory to consider for the plan to be true

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.
To mitigate the negative effects, the plan plays the card of the payable subscription and and makes an exclusivity of its more popular programs on it. if the subscribers do not attach an importance to the price then the plan would have no effect, False
(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.
This comparison is irrelevant. assuming what others are doing in this case completely out of scope

Correct answer is B

Rider210

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17 Jul 2024, 09:11

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(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content. cant be assumption as this will not increase the ad free subscribers.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers. this is what the assumption should be to make such plan.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service. This Cant be assumption

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large. This Cant be assumption

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans. Irrelevent.

AthulSasi

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17 Jul 2024, 09:22

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(A) Subscribers primarily choose the ad-free tier to avoid advertisements, not necessarily for exclusive content.
This assumption weakens the plan of the company since restricting exclusive content will not deter subscribers from choosing ad-free tier.

(B) The availability of popular original content will be a decisive factor for many users when choosing between the ad-supported and ad-free tiers.
This assumption is crucial for the strategy. If popular content is a key driver for subscription choices, then restricting it to the ad-free tier could encourage users to subscribe or remain subscribed to the more expensive tier.

(C) The reduced cost of the ad-supported tier will not significantly increase the total number of subscribers to the streaming service.
This assumption downplays the potential for the ad-supported tier to expand the overall subscriber base. If this was true the company wouldn't have initiated the ad-free tier in the first place.

(D) Most current subscribers to the ad-supported tier do not consider the price difference between the two tiers to be prohibitively large.
If current ad-supported subscribers don't see the price difference as a major barrier, they might be more willing to upgrade to the ad-free tier for access to popular original content. This assumption supports the strategy of using exclusive content as a motivator for upgrading. However this is not as crucial as option B.

(E) Other streaming services do not offer their premium content to subscribers of their lower-priced, ad-supported plans.
Out of scope of the argument. Hence invalid.

Hence correct answer B