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Netflix’s ‘Ad-Supported’ tier surges to 40 million users, signaling strategy success

Netflix announced on Wednesday a significant surge in the adoption of its ad-supported tier, with global monthly active users reaching 40 million, up from five million just a year earlier. This substantial growth underscores the success of Netflix’s strategy to attract new users with a more affordable plan.

The expansion of the ad-supported tier comes amid fierce competition in the streaming industry, with companies increasingly offering bundles to retain subscribers. Since its launch in November 2022, Netflix’s ad-supported plan has garnered significant traction, with 40 percent of all sign-ups originating from these plans in eligible countries.

Significantly, research conducted by Antenna indicated that during the fourth quarter, ad-supported plans were the predominant source of new subscribers for the streaming industry, marking the first instance of such a trend.

As part of its ongoing efforts to strengthen its advertising capabilities, Netflix revealed its intention to launch an internal advertising technology platform by the conclusion of 2025. This strategic initiative offers clients novel methods for procuring advertisements and improving user interaction.

To accelerate automated ad buying, Netflix will collaborate with industry leaders such as Trade Desk, Google Display & Video 360, and ad-tech firm Magnite, who will join Microsoft in this endeavor.

Netflix’s ad-tier plan, priced at $6.99 per month, offers a competitive alternative to other streaming services. Warner Bros Discovery’s streaming service Max, for instance, offers monthly plans starting at $9.99, while Walt Disney’s Disney+ subscription starts at $7.99 per month.

In response to market dynamics, Comcast-owned streaming service Peacock recently announced a price increase for its plans, with the ad-supported option set to rise to $7.99 per month.

In a bid to diversify its content offering, Netflix revealed plans to stream two National Football League games on Christmas Day this year, emphasizing its commitment to incorporating more live programming into its streaming service.

(With inputs from Reuters)



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Published: 16 May 2024, 06:05 PM IST

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