Netflix revealed details about the success of its “Basic With Ads” subscription at Netflix Upfront 2023—showing that viewers will accept ads for lower subscription fees.
Key Details
- In November, Netflix officially launched a two-tier service, allowing users to pay lower $6.99 subscription fees if they accept advertisements.
- Netflix also offers Basic ($10/month), Standard ($15.50/month), and Premium ($20/month) subscription tiers, which offer multiple active streams, downloads, and higher resolutions.
- Six months later, the ad-friendly tier has grown to nearly 5 million subscribers, with the majority being younger viewers, The Wrap reports.
- More than 25% of new Netflix signups were choosing the ad-friendly tier.
- Netflix’s stock valuation has spiked more than 9.5% in the aftermath of the good news.
Why It’s Important
The turnaround is a positive one for Netflix, which has faced intense scrutiny from investors for subscriber losses, hemorrhaging profitability, and high expenses. Netflix remains the most popular subscription streaming service in the world, with Nielson ratings five to 10 times higher than any competing app.
The embrace of the ad-friendly tier similarly marks a massive policy turnaround for Netflix. As we previously reported, former Netflix CEO Reed Hastings promised never to embrace ads for the subscription service. He ultimately relented last year, citing the success of Hulu in offering ad-friendly lower tiers and arguing that Netflix ought to have embraced it sooner.
“Of course, it’s early days for our ad-supported plan, but our signals are all promising,” says Netflix co-CEO Greg Peters.
Netflix is also expected to take more aggressive actions in cracking down on password and account sharing in the near future in an effort to boost revenue, which could boot as many as 100 million password-sharing users off the service.
