Netflix sees surge in ad-supported signups
A growing number of customers are opting for Netflix’s ad-based plan.
Highlights:
- Netflix’s ad-supported tier now accounts for 45% of new subscribers, a 5% increase from the previous quarter.
- Subscribers are opting for a more budget-friendly ad-supported option versus the higher-priced ad-free options.
- Netflix has amassed 40 million active subscribers on its ad-supported plan globally.
Rising popularity of Netflix’s ad-supported plan
Recent data reveals that Netflix’s ad-supported tier now constitutes 45% of new signups, a rise from 40% in the previous quarter. This increase shows that consumers prefer cost-saving options over an ad-free viewing experience.
As of the second quarter, Netflix has secured 40 million active subscribers globally on this tier, making up 15% of its total subscriber base.
The Netflix ad-supported model and its financial implication
Netflix’s ad-supported model offers lower-priced options with ads compared to ad-free plans. These subscriptions are priced at $6.99 monthly, significantly lower than the $15.49 ad-free tier. Netflix will benefit from the additional revenue from ads and the ability to offer lower subscription prices. Despite the lower price, Netflix generates approximately $10 in monthly ad revenue per ad-supported subscriber.
According to Parrot Analytics, Netflix’s ad-supported tier is expected to generate higher average revenue per user (ARPU) as it attracts a more cost-saving audience.
Industry comparison
Like Netflix, various streaming platforms have adopted ad-supported plans in their subscription plans. For instance, Hulu’s ad-supported subscription costs $7.99/month while the plan without ads costs $17.99 monthly.
Similarly, Max (formerly HBO Max) is adjusting its pricing strategies with its ad-free services becoming more expensive while ad-supported options remain stable. The Max ad-supported tier costs $9.99 per month for those who don’t mind watching ads. At the same time, viewers who prefer an uninterrupted streaming experience without any advertisements will subscribe to the ad-free plan available for $16.99 per month.
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