Netflix's ad supported plan is performing well. The company says that it has amassed nearly 5 million active users per month.
Netflix's ad supported tier is growing rapidly
Netflix launched its ad-supported plan in November 2022 in a few markets. The move was criticized by users, experts had predicted that it could hurt the company in the long run, and it did seem to be the case for a couple of months. It is worth nothing that the video-on-demand service had less than one million subscribers in the U.S. who opted for the ad-supported tier before March 2023.
Advertisers had been concerned about the strategy, primarily because the plan did not have enough users, which in turn meant fewer people would watch the ads. Analysts expected existing customers to downgrade to the lower priced plan, however, the introduction of a more affordable option has seen an influx of new subscribers. Netflix has seen its cheapest plan explode in popularity in the past couple of months.
There are many reasons why users may have opted for it, the cheapest plan from the streaming service supports 1080p, and allows users to watch from 2 supported devices simultaneously. In comparison, the Basic plan, which costs more, and only allows you to stream on one device at a time. In other words, the ad-supported plan is better than the Basic plan. Netflix has an impressive catalog of games available for all plans, which could attract gamers to the platform. The ad supported tier's rapid rise in popularity led to the Basic with ads plan being rebranded as Standard with ads.
Netflix wants to introduce new advertising types
The Los Gatos company held a virtual pitch to advertisers yesterday, where it revealed that Netflix's ad supported tier now has nearly 5 million users. Jeremi Gorman, the company's president of worldwide advertising, said that the numbers include all adult profiles used on an account.
Reuters reports that Netflix had 232.5 million paying subscribers around the world in March 2023. 5 million may seem quite small compared to the rest of the user base, but the ad-supported plan is not available in many Countries. It is only available in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the United Kingdom, and the United States.
Ted Sarandos, Netflix's Co-CEO, said that the streaming service still has a long way to go to build scale in advertising. The company wants to change how ad-supported streaming works. Among its plans to overhaul the system, it is working on a new type of advertising where a 30-minute commercial could be played out over several days, with a story unfolding every time a viewer watches a show. Sarandos also pointed out that this cannot be possible on linear (regular) TV channels.
While Netflix's ad supported tier has been growing steadily, the company is also facing a problem, users are leaving the service because of the company's crackdown on password sharing, which makes it more expensive for users who share their account (and the fee) among their family and friends. The company is yet to forbid the practice in the U.S., as it is working on improving the detection mechanisms that are used to determine whether a user is accessing the service from their home or from a different location.
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