How Did the New Netflix Subscribers (NFLX) Handle on ad-supported streaming? An Analysis from the Digital Media Research Group
Only nine percent of new Netflix subscribers in the US opted for the streaming service’s new ad-supported streaming tier last month, according to data from analytics firm Antenna. That’s compared to the 15 percent of new signups that reportedly opted for competitor HBO Max’s ad-supported subscription during its launch month in 2021. On November 3rd of this year, the basic with ads plan was launched at $6.99 a month, which is more than the price of an ad-free subscription.
The company said that “current plans and members will not be impacted” and that “Basic with Ads complements our existing ad-free Basic, Standard and Premium plans.”
Netflix
(NFLX) noted that it will offer broad targeting capabilities by country and genre to help “advertisers reach the right audience — and ensure our ads are more relevant for consumers.”
Viewers will be able to stream content in high-definition video quality (up to 720p) on one supported device at a time under the Basic with Ads plan. Ads will not show up in any Netflix games.
In the first quarter of this year, Reed Hastings said that the company would be open to lower-priced offerings with ads.
The company can’t stick to that strategy anymore. Netflix
(NFLX) has had an awful year. The platform lost subscribers for the first time in more than a decade and had its stock plummet. Netflix
(NFLX) reported last month that it is growing again, but the company needs to show investors that it can bring in revenue even as its subscriber growth has stagnated.
Microsoft andNetflix will partner to improve the sale and technology of the new subscription plan.
Evidence from across the rest of the industry suggests that a hybrid subscription and ad-based model is possible. Antenna reports that 76 percent of Peacock subscribers, 57 percent of Hulu’s, and 44 percent of both Paramount Plus and Discovery Plus’ audiences are subscribed to their respective ad-supported tiers in the US. But Netflix is an established player that’s spent a decade and a half as a subscription-only streaming service that’s now having to retroactively bolt on advertising.
The lowest-priced plan will be introduced in November as the online video service faces growing competition from other streaming providers.
As Netflix struggles to hold onto its subscribers, streaming competitor Disney+ is drawing in millions of subscribers. The Walt Disney Co. announced in August that Disney+ added 14.4 million subscribers in the quarter ending June 30.
The Future of Video Streaming: Why We Are So Happy with Our Product and How We’ve Learned to Get It Wrong
“We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction,” the letter read.
“As we’ve been discussing over the past few quarters, improving our pricing strategy is an important near-term focus,” the company wrote last month, adding that the “reaction from advertisers so far has been extremely positive.”
A person at the company told The Wall Street Journal that they are happy with the launch and engagement of the ad-supported tier. The figures are based on consumer data from third-parties.
“I think the biggest obstacles will actually be a temptation to rush into that perfect experience without laying that foundation first. Gorman said that it was important that we remained committed to getting things right.
Early next year, Netflix plans to start cracking down on password sharing globally, charging an additional fee to use the same account outside of its primary household. This has the potential to drive existing subscribers to pay for discounted ad-supported streaming rather than pay the additional fee.