Netflix’s new ad-supported tier reportedly isn’t as popular as the streamer would like.
The plan accounted for only 9% of new Netflix sign-ups in the United States during November, the first month it was made available, according to subscription analytics firm Antenna, per the Wall Street Journal.
Around 57% of the ad-supported tier’s subscribers in the first month were either returning customers or new users, while 43% downgraded from more expensive plans, Antenna reports.
Additionally, Antenna found that 0.2% of Netflix members in the U.S. as of the end of November were using the ad-supported service, and the number of new customers the streamer added that month in the U.S. was lower than it was in October.
So why did Netflix’s ad-supported tier supposedly fail to attract new subscribers and keep current users from downgrading from the streamer’s more expensive plans, which cost between $9.99 and $19.99?
First off, there’s the argument that this is the first month of the streamer’s $6.99 Basic with Ads plan, so naturally, it will take some time for the plan to find its footing. For now, perhaps, we shouldn’t read too much into the numbers.
That’s certainly Netflix’s point of view, with a spokeswoman telling the WSJ, “It’s still very early days for our ad-supported tier and we’re pleased with its launch and engagement, as well as the eagerness of advertisers to partner with Netflix,” she said. The spokeswoman also noted that Antenna’s figures were inaccurate.
However, Antenna notes when other streaming services launched their own ad-supported plans, they had better figures. When HBO Max launched its ad-supported plan in June 2021, it accounted for 15% of all new U.S. signups, while only 14% of those consumers downgraded from its premium tier.
Then, of course, there are the limited features and content on the ad-supported tier, which doesn’t exactly have subscribers lining up around the corner.
The streamer removed downloading Netflix shows for offline viewing and eliminated around 5%-10% of its titles in its Basic with Ads plan while it works out licensing deals. The latter resulted in more than 250 titles not being available in the U.S. on the cheaper ad-supported plan.
Additionally, Netflix’s lower-cost ad-supported subscription didn’t work with Apple TV or Apple TV 4K devices at the launch. And Netflix’s consumer-facing marketing around the new offering was essentially nonexistent before the debut.
Buyers previously informed Adweek that despite this paucity of marketing, the streamer was planning to launch with more than 400,000 ad-tier users.
MoffettNathanson predicted the ad-supported tier would have 1.8 million subscribers by year’s end and up to 21.5 million by the end of 2023 before Netflix announced its pricing. The number may not significantly increase the streamer’s total user base, which presently stands at 223.09 million, the firm said.
“We’re worried about the potential spin down, as we say. Will people move from the higher-priced tiers to take the ad tier? So that’s concerning,” Michael Nathanson, a senior research analyst at the company, said. “But with that said, there seems to be real advertising interest, as there should be, in this product.”