Netflix’s ad-supported subscription tier has achieved a milestone, with over 23 million active users per month globally, according to statements from Amy Reinhard, Netflix’s Chief Advertising Officer. Launched in November 2022 across 12 markets, including the United States, the ad-supported plan was introduced to attract a broader audience and diversify revenue streams amid intensifying competition in the online streaming landscape.
This announcement follows a year after the initial launch when Netflix reported 15 million active users per month on the ad-supported plan. The streaming giant strategically introduced price hikes on its ad-free subscription options, encouraging more subscribers to opt for the ad-supported tier, where advertising contributes additional revenue.
Reinhard shared insights during the Variety Entertainment Summit at CES 2024, revealing that 85% of Netflix customers on ad-supported plans spend more than two hours per day streaming content on the platform. This statistic highlights the engagement and appeal of the ad-supported tier among users.
The move to offer an ad-supported option reflects Netflix’s adaptability to evolving consumer preferences and the competitive dynamics of the streaming industry. The company’s foray into advertising aligns with broader trends in the market, where streaming services seek to strike a balance between subscription revenue and advertising income.
Netflix’s strategic approach to capturing a share of the advertising market has proven successful, as evidenced by the significant growth in the user base of its ad-supported tier. The platform’s global reach and diverse content library contribute to its ability to attract and retain subscribers across different subscription plans.
An Insider Intelligence report predicts that Netflix is poised to outpace Disney+ in the U.S. advertising market in the coming year. The report attributes this projected success to Netflix’s effective implementation of price increases and measures to curtail password sharing, both of which contribute to the growing popularity of its ad-supported offering.
As Netflix continues to navigate the competitive streaming landscape, the success of its ad-supported tier underscores the importance of flexibility and innovation in meeting the evolving preferences of viewers and capitalizing on new revenue streams.
