Netflix took a lot of criticism for launching a cheaper, ad-supported tier to its membership plans, but it now has 1 million subscribers on that plan in the U.S. This benchmark is seen by many as a sign that ad-supported streaming is viable and is here to stay, even if it hasn’t begun to impact Netflix’s growth just yet. Customers watching Netflix with commercials are still a tiny percentage of the 74 million total subscribers in the U.S., and the 231 million subscribers around the world.
Netflix launched its “Basic with ads” plan in November of 2022, charging $6.99 per month. The description promises HD video quality of 720p and availability on all applicable devices. However, this plan does not come with download capabilities, and a very small number of shows and movies are not available on this plan due to licensing restrictions. The “Basic” plan without ads costs $9.99 per month, while the “Standard” plan jumps to $15.49 per month, which is where features like Full HD 1080p video quality start to kick in.
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Since the ad-supported plan went live in November, the user base has shown intermittent growth according to a report by Bloomberg. In its first month, it jumped by 500 percent, while the following month it grew by only 50 percent. Still, considering the panic last year when Netflix reported a loss instead of a gain in subscribers for the very first time, this is a positive trend overall.
Netflix with ads still lags behind other comparable streaming services that have ad-supported tiers. Hulu charges customers $7.99 per month for its ad-supported plan, while Peacock’s cheapest ad-supported plan is actually free. Both reportedly out-perform Netflix’s new ad-supported plan so far. Meanwhile, popular free ad-supported streaming services like Tubi and Pluto are staying ahead as well. Unlike some of its rivals, Netflix has not put resources into promoting its new cheaper plan.
Bloomberg also reports that most subscribers to Netflix’s ad-supported tier are new users or lapsed users, which is good news for the company. One potential drawback of this new offering could have been customers downgrading their plans from more expensive premium tiers to the cheapest option. So far, that has been rare and inconsequential to the company’s bottom line. As new and returning customers continue to trickle in, analysts expect the number of ad-supported subscribers to rise steadily in the long run.
Experts are also speculating that Netflix’s upcoming password-sharing policy change could increase the number of ad-supported subscribers. They figure that users who are forced off of a friend or family member’s plan may take the cheapest option for their own new Netflix account. However, overwhelming pushback has already slowed the rollout of this new policy once. Right now, there’s no telling for sure what Netflix will do next.
