Only nine percent of new Netflix subscribers in the U.S. opted for the streaming service’s new ad-supported streaming tier last month, according to data from analytics firm Antenna. That’s compared to the 15 percent of new signups reportedly opting for competitor HBO Max’s ad-supported plan during the launch month in 2021. month for an ad-free subscription.
The numbers are not surprising in hindsight Digiday reported that Netflix returned money to advertisers after failing to meet viewership guarantees by as much as 20 percent. But the new data is more evidence that Netflix’s transition from a subscription-only streaming service to a hybrid model is off to a slow start.
“It is still very early days for our ad-supported level and we are pleased with the launch and engagement, as well as the eagerness of advertisers to partner with Netflix,” a Netflix spokesperson said in a statement to The Wall Street log. Netflix disputed the accuracy of Antenna’s numbers, which are based on third-party consumer data.
Netflix has publicly characterized the launch of its ad-supported tier as something it wants to build slowly over time. “What we launched in the beginning was essentially six months after we announced we were going to do an ad-supported launch at all,” Jeremi Gorman, Netflix’s president of global advertising, told me. Digiday in a recent interview, adding that the current offering “is not representative of our long-term ambitions”.
“I think the biggest obstacles will actually be a temptation to rush into that perfect experience without laying that foundation first. I think it’s really important that we stay committed to doing things right, like measuring, delivering, all those basic things,” Gorman said.
Evidence from the rest of the industry suggests a hybrid subscription and ad-based model is possible. Antenna reports that 76 percent of Peacock subscribers, 57 percent of Hulus, and 44 percent of both Paramount Plus and Discovery Plus subscribers are subscribed to their respective ad-supported tiers in the US. But Netflix is an established player that has spent a decade and a half as a subscription-only streaming service that now has to advertise retroactively.
Early next year, Netflix plans to crack down on password sharing globally and charge an additional fee for using the same account outside of the primary household. This has the potential to push existing subscribers to pay for discounted ad-supported streaming rather than pay the extra fee.
Revelation: The edge recently produced a series with Netflix.