Report: Netflix’s New Basic with Ads Plan Was Its Least Popular Subscription Option During Month of Launch
When Netflix announced its plan to launch an ad-supported price tier, the speculation about its potential to generate extra revenue became a major talking point in the industry. Some estimates suggested that Netflix could make an extra $5.5 billion by 2027 thanks to the new plan.
The ad-supported tier launched on Nov. 3 at a price point of $6.99 per month, but it has a long way to go if it’s going to meet market expectations regarding enhanced revenue, according to a new report from market intelligence firm Antenna. According to Antenna’s data, the new Basic with Ads plan was Netflix’s least popular sign-up option during the month of November.
Antenna’s numbers state that the new plan accounted for just 9% of new U.S. subscriptions in the month of November. Fivty-seven percent of subscribers to the new tier were new customers to Netflix, while 43% were existing Netflix users who downgraded from a more expensive price tier.
Netflix’s numbers so far lag behind the stronger gains HBO Max saw when it launched an ad-supported tier in 2021. At that time, HBO Max’s plan with ads accounted for 15% of new sign-ups in its first month, and only 14% of users on the new tier had downgraded from the ad-free plan.
Consumers have demonstrated that, with the right pricing and packaging, they will opt-in to ad-supported video services. In fact, services that launched from day one with an ad-supported tier (or, in Hulu’s case, launched ad-free, but introduced an ad-supported option many years ago) have much higher share of subscribers selecting the ad-supported option.
If the new data from Antenna is even reasonably close to Netflix’s internal figures, it signifies yet another bump in the road for a company that has had a rough 12 months. Netflix saw two straight quarters of subscriber losses in 2022, and had to launch its Basic with ads plan without content from certain studios because Netflix could not agree with those studios on a fair split of ad revenues.
Those new ad revenues may be fleeting for Netflix, at least in the early going. Earlier in December, it was reported that Netflix was refunding some ad companies because it could not meet its contractual impression totals. There could be a number of reasons for this shortfall, but combined with the new data from Antenna regarding new Netflix subscribers, it’s a worrying sign for the world’s largest streamer.
Netflixstill has 223 million global subscribers, and the new Basic with ads plan is only available in 11 other countries besides the U.S. currently. Once it rolls out more globally, it should see a boost in new subscriber sign-ups. But this is hardly the start the company envisioned for its new, lower price tier, and it marks another reason Netflix would probably like to leave 2022 behind.
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.
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