Netflix's ad-supported plan crosses 1 million users in the U.S
Netflix launched its ad-supported plan in November 2022, and it seems to be gaining momentum. The Basic with Ads tier has crossed 1 million users in the U.S.
Netflix's ad-supported tier is growing steadily
Many users, critics, had voiced their concern about the new ad-supported tier when the company had announced its plans last year. Analysts had predicted that the new plan would cause existing subscribers to downgrade to the lower priced tier. But, we were all wrong.
The initial numbers when the plan launched weren't exactly impressive, Netflix only delivered about 80% of the expected audience. In fact, it allowed advertisers to get their money back after failing to live up to the target, even though the advisers were not really worried about the situation.
Are people downgrading from the regular ad-free plans?
The ad-supported plan now boasts over 1 million active users in the U.S. According to an analysis published by Antenna, the Netflix Basic with Ads plan, which is priced at $6.99 per month, added about 9% of new users to the service when it debuted. Things picked up a month later, when it grew by 15% in December, and to 19% in January 2023. As a matter of fact, Netflix's ad-supported plan accounted for 54% of sign-ups in the Basic tier.
The important thing to note here is that this growth was due to new customers who subscribed to the service, not users who had downgraded from a higher priced plan. This has also resulted in the fulfilment of its forecasted deliveries to its advertisers.
Bloomberg reports that it looked at Netflix's internal data last month, the streaming service has 231 million users at the end of 2022, of which 74 million subscribers are in the U.S. The ad-supported plan could
Netflix's user base hasn't been growing in the past couple of years, which could still prove to be a problem in the long run, despite the sudden rise in numbers. Analysts are expecting Netflix's ad-supported plan to draw in about 15 to 30 million users in the U.S., but this will happen slowly over time.
The company's next step will be to crack down on password sharing by introducing Netflix Homes, which allows you to add more users to the account, for an additional fee. This plan was enforced in some countries in the past year. As Martin reported, adding an extra member to an existing subscription is actually more expensive than getting a new ad-supported plan, in some regions. If Netflix enforces the rule in the U.S., which it likely will, the move will drive thousands, if not millions, of users towards the ad-supported tier.
Netflix is not the only one which has been successful when it comes to Advertising-based Video on Demand (AVOD), Disney's record is even more impressive. Only about 5% of its existing users canceled their subscription, when the prices were raised, and 1% of users switched to the ad-supported plan. The other 94% opted to continue with the Disney+ Premium plan despite the price hike. On that note, Disney+ is apparently going to become more expensive in the future.
What do you think of this trend? Do you pay a higher price for an ad-free experience? Or is a cheaper ad-supported plan more appealing?Advertisement