More than half of new Netflix signups were for the cheaper advertising tier
In markets where ads are an option, over 50% of potential customers chose them. Now Netflix just has to figure out how to sell the ads.
More than half of Netflix sign-ups were for its tier with advertising last quarter, a number that’s been steadily climbing since the company unveiled its less expensive ad-subsidized memberships at the end of 2022.
Growing interest in the ad tier, which costs $6.99 in the US compared to $15.49 for the cheapest ad-free tier, is good for Netflix’s two-part plan to have the ad tier become a primary revenue driver.
“Priority number one was we have to grow our ad-tier memberships so that we can get to a sufficient scale to be relevant in each market for advertisers,” co-CEO Greg Peters said on the company’s earnings call last week. “And the big priority number two is we have to improve our capabilities and attractiveness to advertisers and, therefore, the monetization of all that inventory.”
In other words, Netflix has to get better ad tech and more advertising customers to sell more ads and make more money off them.
Currently, Netflix isn’t making as much money on its ad-supported memberships as it is on ad-free, putting it at odds with other streaming competitors.
As Netflix improves its ad technology and viewership, it’s hoping that the ad tier will becoming a “more meaningful contributor” in 2025 and a “primary” revenue contributor after that.
