What you need to know
- Netflix launched an ad-supported plan for $6.99 back in November.
- Only 9% of the streaming service's users reportedly have opted for the new plan.
- In comparison, HBO's ad-supported tier gained 15% of the new sign-ups when launched last year.
Since its inception, Netflix has been very firm in not bringing ads to the platform. However, that changed this year due to its significant drop in the subscriber base. Eventually, Netflix had to introduce an ad-supported plan to help entice more users and gain back revenue. Well, it turns out things are off to a slow start.
For the uninitiated, Netflix launched the "Basic with Ads" in November this year for $6.99. Certain limitations came with the plan, including capping out to only 720p streaming, with no downloads and some missing content. Besides, it already has ad-free plans starting at $9.99 and $19.99 per month.
Antenna, an analytics firm that collects streaming services through third parties, has stated that only 9% of new Netflix subscribers in the United States have opted for the ad-based plan on the streaming platform (via The Verge).
Antenna study revealed that 57% of subscribers who selected the new ad-based package were either returning customers or new users. Additionally, it has been estimated that the remaining 43% of users downgraded from more expensive plans.
However, a Netflix spokesperson has said there were miscalculations in Antenna's analysis. In a statement to Wall Street Journal, the spokesperson stated that 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."
Similarly, Netflix's co-Chief Executive Ted Sarandos stated earlier this month at an investor conference that advertising "is crawl, walk, run. We're definitely 'crawl' right now."
Despite Netflix pointing to the WSJ that numbers from Antenna are inaccurate, another report from Digiday last week also noted that Netflix had let advertisers take their money back since the ad-based tier had missed the viewership targets.
The Digiday report further mentions that initial Netflix advertising agreements were set up on a "pay on delivery" basis. Advertisers would only be paying for the viewers they managed to retain. Moreover, in this case, Netflix managed to deliver to 80% of the expected audience.
Netflix is one of many of the best streaming platforms in the market that has launched the ad-based tier. It certainly had a slow start in gaining new sign-ups for its new ad-supported plan; its competition, HBO Max, managed to gain around 15% of new sign-ups when it launched last year in the same month in the U.S.
