Netflix’s ad-supported tier is reportedly off to a slow start

Only nine percent of new Netflix subscribers in the US 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 that reportedly opted for competitor HBO Max’s ad-supported subscription during its launch month in 2021. Netflix’s “Basic with Ads” plan launched on November 3rd at $6.99 a month, compared to between $9.99 and $19.99 per month for an ad-free subscription. 

The figures aren’t surprising after Digiday reported that Netflix has 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 solely subscription funded streaming service to a hybrid model is off to a slow start.

“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,” a Netflix spokesperson said in a statement to The Wall Street Journal. Netflix disputed the accuracy of Antenna’s figures, which are based off consumer data from third-parties.

Netflix has publicly characterized the launch of its ad-supported tier as something it plans to slowly build over time. “What we launched with at the outset was essentially six months after we announced that we were doing an ad-supported launch at all,” Netflix’s president of worldwide advertising Jeremi Gorman told Digiday in a recent interview, adding that its current offering “isn’t 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 remain committed to getting things right, like measurement, delivery, all of those basics,” Gorman said.

Evidence from across the rest of the industry suggests that a hybrid subscription and ad-based model is possible. Antenna reports that 76 percent of Peacock subscribers, 57 percent of Hulu’s, and 44 percent of both Paramount Plus and Discovery Plus’ audiences are subscribed to their respective ad-supported tiers in the US. But Netflix is an established player that’s spent a decade and a half as a subscription-only streaming service that’s now having to retroactively bolt on advertising.

Early next year, Netflix plans to start cracking down on password sharing globally, charging an additional fee to use the same account outside of its primary household. This has the potential to drive existing subscribers to pay for discounted ad-supported streaming rather than pay the additional fee.

Disclosure: The Verge recently produced a series with Netflix.