Netflix’s New Ad-Supported Tier Was Its Least Popular Plan

Why did this happen?

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Netflix's New Ad-Supported Tier Was It's Least Popular Plan, Report Comfirms
Image: Netflix

So much has changed in the streaming landscape in recent years. Netflix, in particular, faces far more competition than in previous years now that the rest of the industry has caught up to its lead. To say the least, the streamer has had a difficult year. However, Netflix’s ad-supported tier is now officially available to subscribers.

For most of its existence, those at Netflix believed that an ad-supported tier was never an option. However, when you lose 200,000 subscribers in one quarter, it’s easy to see why they changed their minds. The new tier was launched at the beginning of November; at $6.99/month. The plan is currently the least expensive choice available on the site, next to the basic $9.99/month plan. The ad-supported tier is part of Netflix’s strategy to diversify revenue and grow its subscriber base.

According to The Wall Street Journal, the plan accounted for only 9% of new Netflix sign-ups in the United States during November, compared to the 15% of new subscriptions that HBO Max saw when it introduced a similar ad-supported tier in 2021. According to Antenna, 57% of the ad-supported tier’s members in the first month were either returning customers or new users. Meanwhile, 43% downgraded from more expensive.

Furthermore, the report discovered that 0.2% of Netflix subscribers in the United States were using the ad-supported service as of the end of November, and the number of new users the streamer added that month in the United States was fewer than it was in October.

Why did it fail to impress?

Netflix’s worst performance this year has been influenced by several variables, including potentially a lack of interest in the new plan, especially when considering a few significant events. The basic plan’s price increased from $8.99 to $9.99 per month, the standard plan from $13.99 to $15.49 per month, and the premium plan from $17.99 to $19.99 per month in January. In response to the situation between Russia and Ukraine, Netflix shut down in Russia, losing another 700,000 customers.

The decreasing client growth for the streaming service may be demonstrated by other broader phenomena. Users of Netflix have been sharing usernames and passwords for years. This has prompted Netflix to start taking action and implement a plan to limit access to accounts to specific homes. Additionally, the company has been losing licensed shows like Friends, The Office, and Criminal Minds, which may have diminished the attraction of its streaming library. Finally, Netflix has been facing intense competition for a while now from both established services like Prime Video, HBO Max, Hulu, and Disney+, as well as emerging ones like Peacock and Paramount+. The stranglehold that Netflix formerly held during the early stages of the streaming wars is no longer valid.

The ad-supported strategy hasn’t increased Netflix’s typical revenue or audience thus far. This may be attributed to the fact that the plan doesn’t provide many incentives for new and returning customers, as subscribers are only permitted to stream on one device at a time, and downloads are not permitted. Or it’s still too early to know, as the Netflix spokesman put it. The development of one month is not very representative of how a yearly report can appear. Whether Netflix’s most recent strategy has been successful or not will be determined in large part over the coming months.

What are your thoughts on this? And why do you think Netflix’s Ad-Supported Tier failed to impress? Let us know in the comments down below.

Oviya Priyadharshini

Oviya Priyadharshini

Oviya loves to watch movies and she loves to write. So, she writes about what she watches. Do check out!
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