Netflix's Ad-Tier Lures 5M Monthly Users: How Does That Compare With Streaming Rivals?

Netflix Inc.’s NFLX ad tier continues to gain traction, attracting nearly five million monthly active users, leaving many wondering how other streaming giants are navigating the changing landscape of subscription-based platforms. 

What Happened: On Wednesday, Jeremi Gorman, Netflix’s president of worldwide advertising, said that the company’s ad-supported tier had reached nearly five million active users per month, reported Reuters. 

The streaming giant launched the $6.99-a-month option with commercials last November to attract more customers and create a new revenue stream amid intense competition for online viewers.  

At the annual upfronts presentation, Netflix highlighted its range of content, from the popular science fiction series “Stranger Things” to the Korean drama “Squid Game” and the upcoming action sequel “Extraction 2,” emphasizing its global reach and diverse audience. 

The company stated that at the end of March, it had a total of 232.5 million subscribers globally who were paying for its services, the report noted.

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In Rival Camps: Apart from Netflix, platforms like Disney+, owned by Walt Disney Co. DIS and Hulu, where the media giant owns a majority stake, also offer ad-supported tiers to users. HBO Max, a streaming platform from Warner Bros. Discovery WBD, is also part of this list. 

Disney+ launched its ad-supported tier, “Disney+Basic,” at $7.99 monthly. According to subscription measurement firm Antenna, in its third month, 36% of the new subscriptions to Disney+ were for the Basic plan or the Disney Bundle to Trio Basic, which includes Disney+, Hulu and ESPN+. In comparison, Netflix and HBO Max had 19% and 21% of their new signups, respectively, opting for ad-supported tiers within the same time frame. 

HBO Max launched its ad-supported tier in June 2021 at $9.99/month. A separate Antenna report stated that by the end of the second quarter of 2022, HBO Max boasted a subscriber base of 15.1 million. Among these subscribers, 1.9 million, equivalent to 12%, opted for the ad-supported tier. 

During the second quarter of 2023, the Walt Disney Company announced growth in Hulu’s paid subscriber base, reaching 48.2 million subscribers, compared to 45.6 million in the same period of the previous fiscal year. According to a report by Techjury, more than 60% of Hulu users watch content with ads. 

Why It’s Important:  With so many streaming platforms available, the cost of subscribing to all of them can be steep. As a result, viewers are looking for ways to cut costs, despite the annoyance of ads. 

Netflix was previously against adding ad-supported content, with executives saying in March 2022 that it was not in the company’s plans.

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