Subscription analytics firm Antenna reports that Netflix's new ad-supported plan is the streaming platform's least popular option. The new tier was introduced in early November; with a cost of $6.99/month, the plan is now the platform's most affordable option, next to the basic $9.99/month plan. The ad-supported tier is part of Netflix's initiative to diversify revenue and grow its subscriber base.

According to The Wall Street Journal, Antenna reports that Netflix's ad-supported plan is the least popular option amongst subscribers in its first month. About 9% of new Netflix sign-ups in the U.S. could be traced back to the plan, compared to when HBO Max launched a similar ad-supported tier in 2021, which accounted for 15% of new subscriptions. By the end of the month, Netflix subscriptions with ads accounted for 0.2% of the customer base overall. A spokeswoman for the streaming service pushed back against these figures and provided a more positive spin:

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.

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Netflix's Rough 2022 Explained

Man and Woman Sitting on a Couch in Front of a Television watching netflix

Various factors have played into Netflix's poorer performance this year — and perhaps the lack of interest in the new plan, especially when looking at a few key events. In January, each subscription plan saw a price increase: the basic plan went up from $8.99 to $9.99/month, the standard plan from $13.99 to $15.49/month, and the premium plan from $17.99 to $19.99/month. Netflix lost further subscribers — roughly 700,000 users — when it pulled the plug in Russia as a response to the Russia-Ukraine conflict. Finally, while hits like Stranger Things season 4 contributed to an increase in viewers and subscribers over the summer, the higher ratings and rise in subscriptions lagged soon after the hype had died down.

Other general trends may illustrate the streaming service's decreased customer growth. Netflix users have for years shared accounts and passwords, prompting Netflix to start cracking down with a plan to restrict access to accounts to individual households. In addition, the platform has been losing licensed titles — including favorites like Friends, The Office, and Criminal Minds, making its streaming catalog perhaps less appealing. Finally, Netflix has, for some time now, had steep competition, with established platforms like Prime Video, HBO Max, Hulu, and Disney+ and rising services like Peacock and Paramount+. Netflix no longer has the monopoly it did in the early days of the streaming wars.

So far, the ad-supported plan hasn't boosted Netflix's average revenue or viewership. This could be explained by the fact that the plan doesn't offer much incentive for first-timers and returning users: subscribers can stream only on one device at a time, and downloads are also disabled. Or, as Netflix's spokeswoman stated, it's still too soon to tell. One month's progress isn't very indicative of how a yearly report may look. The next few months will be crucial in determining whether or not Netflix's latest strategy has panned out.

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Source: WSJ