Netflix Ad-Supported Tier Reaches One Million Accounts In The United States

Netflix is a subscription streaming service.(photo: dock.pexs)

Netflix is a subscription streaming service that works by providing unlimited access to their content for a certain monthly fee. But as Netflix's declining revenue starts offering cheaper subscription features with the consequences of advertising.

Previously, several other streaming platforms such as Hulu and Amazon Prime Video offered subscriptions that allow ads to be displayed in screened content. The reason why these platforms offer this option is to offer more affordable prices for their customers who don't mind advertising.

According to internal data seen by Bloomberg, about a million accounts have now signed up for ad-supported Netflix tiers in the US. The tier was first launched in early November 2022 and allegedly started slowly. But in January, 19 percent of new registrations in the US selected ad-supported tier for $6.99, according to analytics firm Antenna.

Bloomberg warns that the internal data it sees is "at least one month old and doesn't take into account users watching through the same account. However, those figures suggest that Netflix is finding a foothold with this new revenue stream after for most of its history relies heavily on subscription revenue.

Bloomberg notes that ad-supported subscribers appear to be using this service, not users who lower traditional tiers without ads.

Antenna's analysis shows Netflix's shift to ad-supported models is slower than its competitors, HBO Max and Disney Plus, when the two introduced their ad tiers in June 2021 and December 2022.

In its third month, 36 percent of Disney Plus's new registrations voted for ad-supported tiers, compared to 21 percent for HBO Max and 19 percent for Netflix. However, it is striking that Netflix appears to have now met its forecasts for advertisers, having initially failed to meet the assurance of the number of viewers.

Despite the growth, ad-supported users represent a fraction of Netflix's 74 million user bases in the US. However, this situation may change in the next few months, when Netflix's long-pre promised action against password sharing is rolling out more widely.

If users are sensitive enough to prices and share accounts with friends, then they may also be sensitive enough to prices to choose cheaper ad-supported tiers.