Netflix’s Ad Supported Service Hits 1 Million Monthly Users In The US

Netflix’s advertising-supported service has hit a major milestone by reaching 1 million monthly active users in the US after just two months, according to internal data obtained by Bloomberg. This represents a massive increase of more than 500% in the first month from its launch and another 50% in its second month. Despite a slow start and initial concerns about underdelivering on viewership promises, Netflix has fulfilled its forecasted deliveries to advertisers, indicating that the ad tier is gaining traction.

Marketers were initially able to reallocate their advertising budgets elsewhere, but now it seems that Netflix’s advertising business is starting to take off. While Hulu and Peacock currently have more users on their advertising-supported platforms, Netflix and Disney’s new advertising-supported services are performing as intended.

However, it’s important to note that the advertising tier has not yet had a meaningful impact on Netflix’s overall growth. Free services like Tubi and Pluto, as well as YouTube, still have significantly more viewership for ads. Nevertheless, Netflix’s successful launch of its advertising business in less than a year with zero promotion is a promising start.

As the streaming landscape continues to evolve, it will be interesting to see how Netflix’s advertising-supported service fares in the long run. For now, the company can celebrate reaching 1 million users in just two months and fulfilling its promises to advertisers.

Netflix’s introduction of an advertising-supported tier was aimed at offering price-conscious consumers an affordable alternative to the main plan, which has effectively doubled in price over the last decade in the US. Despite concerns that this new tier would cause existing customers to downgrade, most of the people signing up for the ad tier are actually new or lapsed customers, not those immediately changing plans. In fact, the ad tier accounts for about 20% of new sign-ups in the US, according to Antenna.

It’s still unclear how many people have signed up for the ad tier and whether it has boosted Netflix’s total number of subscribers. The 1 million monthly active users in the US includes multiple people using one account and is at least a month old. Analysts estimate that the ad tier could bring in between 15 million and 30 million customers in the US, but not right away.

Netflix’s crackdown on password sharing will test the effectiveness of the ad tier as millions of people will be forced to either quit or pay. For price-sensitive viewers, the $7 ad-supported version of Netflix may be more appealing than the $15 or $20 version.

The potential new revenue from advertising and the crackdown on password sharing, coupled with Netflix’s more conservative spending on new shows, have convinced one of the biggest Netflix sceptics on Wall Street to raise his target price for the company. Analyst Michael Nathanson increased his estimate by $64 to $315, indicating a more positive outlook for Netflix’s future growth.

Netflix’s Ad-supported plans are available in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the United Kingdom, and the United States. They plan to expand the service to more countries in the months ahead.