Toni Dimaano Tech 03.20.2023 09:Mar AM EDT

Netflix's Ad-Support Tier Is Gaining Support In The US, Reports Find

After its second month, Netflix's advertising-supported service had approximately 1 million monthly active customers in the US.

According to internal information seen by Bloomberg, the user base increased by over 500% in the first month after introduction and by another 50% in the following month.

The Tier Finally Hits One Million Subscribers

In the US, around one million accounts have now subscribed to Netflix's ad-supported tier, according to reports.

Early in November, when the tier was first introduced, it is believed to have had a slow start, but, in January, 19% of US new signups chose the $6.99 ad-supported tier.

The internal data it observed, however, is "at least" a month old, and it does not take into account numerous persons watching through the same account.

Nonetheless, the data suggests that Netflix is establishing itself with the new revenue source after being largely dependent on subscriber revenue for the majority of its history.

According to The Verge, people are not downgrading from a standard ad-free plan but rather seem to be new to the service.

With this, those familiar with the agreements claim that Netflix has delivered what was anticipated to marketers.

Netflix did not deliver as many viewers as it had promised advertisers in its first few weeks, sparking a wave of reports about the firm's rocky start.

It is important to note that this may come as a surprise to those who had been closely monitoring the company.

It is also worth noting that despite the surge, just a small part of Netflix's 74 million US subscribers are ad-supported.

Nevertheless, as the company's long-promised crackdown on password sharing expands, that may alter in the months to come.

The thinking goes that if a user is price sensitive enough to share an account with a friend, they may also be sensitive enough to choose a less expensive ad-supported tier.

The Ad Tier Is Attracting Customers Despite A Rough Start

In its initial few weeks, Netflix did not deliver as many viewers as it had promised advertisers, leading to a flurry of articles about the company's rocky launch.

But, given that Netflix established its advertising company in less than a year and launched it with zero promotion, most advertisers were not concerned then and are not concerned now.

This does not necessarily imply that the advertising tier has, at this point, significantly impacted Netflix's growth, Bloomberg says.

It can be remembered that to provide users with alternatives who are price conscious, Netflix introduced a tier sponsored by advertising.

Although a large number of people subscribe to Netflix (231 million as of the end of last year), the service is out of reach for many.

Despite this, instead of consumers who abruptly changed plans, the majority of those enrolling in the ad tier are either new or lapsed clients.

In the US, Netflix currently has 74 million subscribers, so there are not many prospective new viewers.