Netflix’s Ad-Supported Tier Has Smallest Percentage of Subscribers in the Industry; Is Streamer’s Brand Holding It Back?
Netflix’s Ad-Supported Tier Has Smallest Percentage of Subscribers in the Industry; Is Streamer’s Brand Holding It Back?
At 232.5 million global subscribers, Netflix is comfortably the world’s largest streaming service. But a new report from the Wall Street Journal indicates that Netflix’s ad-supported plan — which launched in November and renamed “Standard with Ads” in late April — has not seen the explosive growth that the streamer was likely hoping for.
WSJ cites data from the TV research firm Antenna, which indicates that Netflix had 937,616 customers on the Standard with Ads plan at the end of March, or just over 0.4% of Netflix’s total customer base. Of the major streaming services available, only Disney+ had fewer users on its ad-supported tier, with 863,791. But this is still a larger proportion of its 161.8 million global customers, albeit slightly, making up 0.53% of Disney+’s total subscriber pool. Disney launched its ad-supported plan in December, one month after Netflix.
All of the other major streamers with ad tiers like HBO Max, Hulu, Paramount+, and Peacock are also beating Netflix’s total, some quite handily. Peacock, despite having less than one-tenth as many subscribers as Netflix overall, has 15.5 million customers on its ad-supported tier. Admittedly, these other services have offered ad-supported streaming for years longer than Netflix has — some since launch — but the power of the Netflix brand led many to assume that its Standard with Ads plan would take off quickly.
Antenna’s data regarding Netflix’s ad-supported plan has been painting a similar picture for months. In March, the company released data that showed Netflix trailing Disney+ and HBO Max in the percentage of users who were signing up for Standard with Ads. Bloomberg reported in March that Netflix was up to 1 million domestic users for the plan, which seems like a generous estimate given Antenna’s numbers. It is important to note that Antenna’s figures do not include wholesale deals, such as Netflix’s pact with Verizon which gives users a free year of the service if they sign up for another annual streaming subscription on Verizon’s +play.
In response to the relatively slow adoption of Standard with Ads, some advertisers are urging Netflix to start promoting the tier more actively. Netflix may be swimming upstream against its own reputation, as users have grown accustomed to thinking of the service as an ad-free alternative to traditional TV. But the Standard with Ads plan creates more average revenue per user (ARPU) than Netflix’s $15.49 per month Standard plan, so it would be in Netflix’s best interest to do whatever it has to in order to drive more customers to the ad-supported tier.
A crackdown on password sharing will likely help quite a bit. Netflix has promised to introduce restrictions on account sharing in the United States and most other global territories this quarter. Those guidelines are already in place in Canada, where users who want to add a person outside the home to their account are charged $7.99 per month. If the same charge is implemented in the United States, it will become cheaper for the sharing user to get a Standard with Ads plan for $6.99 per month than to stay latched to another user’s account and pay them monthly to access it.
There’s still time for Netflix to make the Standard with Ads plan a big success, but it hasn’t gained the traction that the company was hoping for so far. It lags well behind most other streamers in the industry, and even Disney+ has a larger proportion of users on its ad-supported plan than Netflix does.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.