According to data from analytics company Antenna, just 9% of new Netflix subscribers in the US selected the streaming service’s new ad-supported streaming tier last month. Comparatively, during HBO Max’s inaugural month in 2021, 15% of new signups reportedly chose the ad-supported subscription instead. On November 3rd, Netflix introduced its “Basic with Ads” plan, which costs $6.99 per month instead of the $9.99 to $19.99 per month required for an ad-free membership.
The numbers aren’t shocking given that, according to a Digiday report, Netflix has given back money to advertisers after falling short of audience targets by as much as 20%. The new data, however, provides additional proof that Netflix’s move from a streaming service that is entirely supported by subscription fees to a mixed model is proceeding slowly.
Netflix spokesperson in a statement via The Wall Street Journal stated that “It’s still very early days for our ad-supported tier and we’re pleased with its launch and engagement, as well as the eagerness of advertisers to partner with Netflix.” Antenna’s figures, which are based on consumer data gathered from third-party sources, were contested by Netflix and regarded as inaccurate.
According to statements made public by the streaming platform, its ad-supported tier is one it intends to gradually expand over time. Netflix’s president of worldwide advertising Jeremi Gorman in a recent interview revealed that “What we launched with at the outset was essentially six months after we announced that we were doing an ad-supported launch at all.” Gorman added that its current offering “isn’t representative of the company’s long-term ambitions.” Gorman further stated, “I think the biggest obstacle will actually be a temptation to rush into that perfect experience without laying that foundation first. I think it’s really important that we remain committed to getting things right, like measurement, delivery, all of those basics.”
It is possible to have a hybrid subscription and ad-based approach, according to evidence from the rest of the industry. According to Antenna, in the US, 76 per cent of Peacock subscribers, 57 per cent of Hulu subscribers, and 44 per cent of the subscribers for Paramount Plus and Discovery Plus are each subscribed to their respective ad-supported tiers. But Netflix is an established business that has spent the last 15 years offering a subscription-only streaming service that now needs to retrospectively add advertising.
As we roll into the new year, Netflix intends to implement its crack-down plans on password sharing globally and introduce a price for using the same account outside of one’s permanent residence. Existing subscribers may choose to pay for cheaper ad-supported streaming instead of the added charge as a result of this crackdown.