Report: Despite Slow Start, Netflix’s Ad Tier Drove Highest Domestic Sign-Ups Since 2020
Report: Despite Slow Start, Netflix’s Ad Tier Drove Highest Domestic Sign-Ups Since 2020
It would be hard to deny that Netflix’s new ad-supported tier hasn’t exactly been everything that the company hoped it would be when it launched in November. The lower-priced plan has not yet led to a huge influx of new subscribers and Netflix has reportedly been refunding some advertiser money due to viewership shortfalls.
However, a new report from the London-based market researcher Ampere Analysis offers a glimmer of hope for the world’s largest streamer. Ampere’s data shows that the launch of the ad-supported tier led to the highest daily subscription sign-up rate in the United States since the start of the COVID-19 pandemic in April 2020. Specifically, the release of the ad tier led to a 58% increase in the streamer’s average daily sign-up volumes from Nov. 3 to 5, compared to the three days before the launch.
Since the new Basic with Ads plan was made available to subscribers, 8% of those signing up to Netflix or changing their plan have selected the ad-supported option. Of these, three out of four are new sign-ups; 64% are customers re-subscribing, while 36% are signing up for the first time.
The fact that nearly two-thirds of those subscribers are coming back is another hopeful piece of information for Netflix. Customers that churn away from a service and boomerang back to it are the most difficult to keep in the long term, but the new Basic with Ads plan might do a better job of keeping those customers in-house, as long as Netflix can demonstrate the value of the price tier.
Ampere’s data also showed that most customers who picked the Basic with Ads plan were stackers. Seventy-five percent of users of Netflix’s new price tier were also subscribed to at least three other streaming services, with Prime Video, Disney+, and Hulu being the most common other choices.
That’s a further demonstration that users of the Basic with Ads tier think of it as a good value. If they see it as worth combining with other services and bumping up their total streaming costs, it’s a good omen that customers will be more likely to stick around instead of bolting when a better offer from another streamer comes along.
“Netflix’s Basic with Ads tier has succeeded at drawing back more price-sensitive Netflix subscribers who had previously churned,” Ampere analyst Mayssa Jamil said. “In addition to this, with the strengthening of competitor services, the low $6.99 price point makes it more affordable to subscribe to multiple services at once, and has therefore also appealed to heavy stackers. Finally, some Basic tier users (who are more prone to churning as economic uncertainty and competition increases) have been downgrading to the ad tier, which will aid customer retention in the long-term.”
There can be no doubt that Netflix has more work to do in order to improve its ad-supported tier. The service has still not agreed with some major studios regarding a split of ad revenues, meaning that certain content is not available to users on the ad-supported tier. Still, the data from Ampere shows that while Netflix shouldn’t consider Basic with Ads a finished product, the news isn’t all doom and gloom for the service.
Netflix
Netflix is a leading subscription-based video streaming service that offers on-demand access to an extensive library of over 3,000 movies, 2,000+ TV shows, and a growing collection of acclaimed Netflix originals. Renowned for producing groundbreaking content, Netflix has become a cultural powerhouse with hit originals like “Stranger Things,” “Wednesday,” “Squid Game,” “The Crown,” “Tiger King,” “Bridgerton,” “The Witcher,” and “Black Mirror.”