(Reuters) – Netflix stated on Wednesday that its ad-supported tier had achieved 15 million active users per month, one year after the streaming giant introduced the cheaper plan to revive subscriber growth and revenue following a slowdown. The company had five million monthly ad-tier users in May and has been increasing prices on its ad-free options in an effort to encourage more subscribers to switch to the other tier, where commercials help generate more revenue per user.
Netflix recently raised subscription prices for certain streaming plans in the United States, Britain, and France, after outperforming Wall Street predictions of 6 million new subscribers with an addition of 9 million subscribers in the third quarter.
After years of resisting commercials, Netflix changed its stance in April 2022 following a decline in subscribers in the first quarter of the year. Just a month after launching its ad-supported plan, Disney+ also introduced its own ad-supported version to improve profitability in its streaming business.
HBO Max, Paramount+, and Peacock, other streaming services, have also begun offering ad-supported versions of their platforms, emulating the business model that has long supported the television industry.
Next year, Amazon’s Prime Video will follow suit by implementing ads and introducing a higher-priced ad-free tier, joining its competitors in the streaming market.
Netflix reported during its third-quarter results that the adoption of its ad-supported plan, priced at $6.99 per month in the United States, continued to grow with a nearly 70% sequential increase in membership. In countries where the ad-supported plan was available, 30% of signups opted for the ad-tier subscription.
(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Devika Syamnath)
