Netflix denies accuracy of report that says its new ad-supported tier is off to a sluggish start
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According to data released by Antenna, Netflix’s new ad-supported monthly service is not off to such a great start. The lower-priced service launched on November 3rd and for the month, the “Basic with Ads” plan was responsible for only 9% of U.S. sign-ups in November. Last month, 0.1% of existing Netflix subscribers switched from another plan to the streamer’s ad-supported service.
The data posted by Antenna shows that in the U.S. from May through October of this year, 29% of Netflix subscribers were signed up for the Premium service, 31% were members of the Standard tier, and 40% were subscribers to the Basic plan. At the end of last month, when the “Basic with Ads” service had been around for about four weeks, the plan made up 9% of Netflix’s total subscriber count in the states.
The new ad-supported plan reduced the percentage of Premium subscribers to the platform by 14% to 25%. The Standard plan was hit the hardest as the percentage of U.S. Netflix subscribers signed up to that plan declined by 23% to 24% from 31%. The Basic tier actually added 3% to 41%. Antenna computes its numbers from millions of raw transaction records including online purchases, and credit and banking data.
According to LightReading, Antenna “cleans and models” the raw data to compute the numbers you see in this article. But the Journal says that Netflix doesn’t believe that the data presented by Antenna is accurate. A Netflix official stated, “[it’s] still very early days for our ad-supported tier and we’re pleased with its launch and engagement, as well as the eagerness of advertisers to partner with Netflix.”
Still, Netflix reportedly had to return some ad revenue back to advertisers after failing to meet viewing estimates for its “Basic with ads” service. This was the subject of a report published earlier this month by Digiday. According to unnamed agency executives, in some cases, Netflix delivered approximately 80% of the expected audience. “They can’t deliver. They don’t have enough inventory to deliver. So they’re literally giving the money back,” said one agency executive.
Ted Sarandos, Netflix’s co-CEO, said at the UBS Global Technology, Media & Telecom Conference earlier this month, “Advertising for us is ‘crawl, walk, run.’ We just turned it on, and it works.” Calling advertising a “long-term initiative” for the streamer, the executive hinted that there will “likely” be more than one ad-supported tier of service available to Netflix customers in the future.
The “Basic with ads” service is $6.99 per month. Netflix describes it this way: “Basic with ads is a great way to enjoy movies and TV shows at a lower price. You can stream your favorites on any device with limited ad breaks. This plan does not allow downloads and a limited number of movies and TV shows are not available due to licensing restrictions. Some location and device restrictions also apply.” Video streams in HD resolution with this plan.
The Basic service is priced at $9.99 per month and while content is also available on just one supported device at a time, with Basic you can download content. Subscribers to the Basic tier see Unlimited movies, TV shows, and mobile games in HD resolution.
There is a big jump between the $9.99 monthly cost for the Basic plan and the next tier up, Standard. The latter is priced at $15.49 per month and delivers content to two supported devices at a time in Full HD resolution. Subscribers can view Unlimited movies, TV shows, and mobile games and download them.
For $19.99 per month, Netflix offers its top-tier service called Premium which allows content to be viewed by four supported devices at a time. The content, which includes Unlimited movies, TV shows, and mobile games, is streamed in Ultra HD resolution.
Questions & Answers
Q.What percentage of Netflix's total U.S. subscriber count did the 'Basic with Ads' plan represent after its first four weeks?
What percentage of Netflix's total U.S. subscriber count did the 'Basic with Ads' plan represent after its first four weeks?
A.
After about four weeks, the 'Basic with Ads' plan made up 9% of Netflix’s total subscriber count in the U.S. This is based on data provided by Antenna for the period.
Q.How did the introduction of the ad-supported plan affect existing Netflix subscription tiers in the U.S.?
How did the introduction of the ad-supported plan affect existing Netflix subscription tiers in the U.S.?
A.
The Premium tier saw a 14% reduction to 25%, while the Standard plan, originally at 31%, declined by 23% to 24%. The Basic tier, however, increased its share by 3% to 41% of U.S. subscribers.
Q.Why did Netflix reportedly have to return some advertising revenue to advertisers?
Why did Netflix reportedly have to return some advertising revenue to advertisers?
A.
Netflix reportedly returned ad revenue because it failed to meet viewing estimates for its 'Basic with Ads' service. According to unnamed agency executives, in some cases, the platform only delivered approximately 80% of the expected audience.
Q.What are the main limitations of the 'Basic with Ads' plan compared to the standard 'Basic' plan?
What are the main limitations of the 'Basic with Ads' plan compared to the standard 'Basic' plan?
A.
The 'Basic with Ads' plan does not allow downloads and has a limited number of movies and TV shows available due to licensing. In contrast, the standard 'Basic' plan permits content downloads.
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