Netflix’s $6.99 Plan Sees User Surge Since Ad-Free Price Hikes, Says Ad Chief
Netflix’s advertisement-tier subscription appears to be growing fast in popularity. Amy Reinhard, the streaming giant’s president of advertising, said at the Variety Entertainment Summit at CES 2024 yesterday (Jan. 10) that Netflix’s ad-supported subscription now has over 23 million monthly active users. That suggests Netflix may have added millions of new subscribers to its ad-tier package since November, when the company reported the plan had 15 million users.
“We’re very fortunate to be able to take a long-term perspective on this,” Reinhard said at the summit. “Scaling our business is absolutely our biggest priority right now, but we want to make sure we’re doing that in a meaningful way for the members.”
In October, Netflix hiked prices on its two ad-free plans by as much as 20 percent in the U.S., the U.K. and France, a strategy that may have attracted many customers to the cheaper ad-tier plan. Netflix’s ad-tier plan costs $6.99 per month. The ad-free plans are more than twice as expensive, starting at $15.49 a month.
According to Reinhard, what the streaming company is “really excited about” is user engagement. She said 85 percent of Netflix’s ad-tier subscribers spend more than two hours a day on the platform.
In Netflix’s last quarterly earnings in October, top executives said the company’s growth plan would focus on improving the user experience of the ad-tier plan as a way to attract more new subscribers. During Advertising Week in New York City that month, Peter Naylor, Netflix’s head of global advertising sales, announced a few new ad formats, such as “binge ads” and sponsored live events like The Netflix Cup, that would be integrated into Netflix content in a different way than traditional linear TV ads.
“It’ll be part of the broadcast in a way that’s natural and holistic,” Naylor said at the event.
Netflix’s focus on its ad-tier subscribers mirrors strategies at rival streaming platforms. Amazon (AMZN)’s Prime Video is launching an ad-supported plan later this month (Jan. 29) while increasing the price of ad-free packages. Prime members who previously had ad-free Prime Video will have to pay $3 extra to watch without ads.