Netflix is already trying to strong-arm customers onto its ad plan. "I'd say we got years of work ahead of us to take the ads business to the point where it's a material impactor to our general business," Peters said. While Netflix has seen revenue grow from other efforts, like password crackdowns and price hikes, it plans to focus heavily on scaling its ad business over the coming years. That's after adding 13.1 million subscribers in Q4 2023, Netflix's biggest Q4 yet.īut despite currently besting competitors in subscriber count and cash flow, Netflix faces similar challenges when it comes to wooing advertisers that may be unaccustomed to working with streaming services (which previously had limited advertising opportunities). Netflix said this week that it has 260.28 million subscribers globally (for comparison, Disney+ has 66.1 million subscribers, Hulu 48.5 million, and Amazon Prime Video is estimated to have about 180.1 million). Netflix’s ad business: years of work ahead The tier has over 23 million subscribers, per Bloomberg.ĭuring an earnings call on Tuesday, Netflix co-CEO Greg Peters noted Netflix's 2024 priorities as including "pricing optimization" to help improve operating margins and grow revenue and its ad business. Ad tier membership grew almost 70 percent quarter over quarter in Q4 2023. Netflix's letter said ad membership grew when it stopped offering the Basic ad-free plan to new subscribers. Combined with the fact that most of Netflix's North American users are from the US, it's expected that Netflix will cut the Basic plan in the US, too. Netflix originally cut the Basic plan in Canada before following suit in the US and UK. The ads plan now accounts for 40 percent of all Netflix sign-ups in our ads markets and we’re looking to retire our Basic plan in some of our ads countries, starting with Canada and the UK in Q2 and taking it from there. But it seems like that grace period will soon end. Netflix customers who were already subscribed to the ad-less Basic plan have been allowed to keep using it. The change spiked the cheapest price for ad-free Netflix 55.06 percent to $15.49/month. It included 720p resolution, downloadable content, and support for one device. In another attempt to push subscribers into watching ads on Netflix, the streaming company stopped offering new subscribers the aforementioned $11.99/month, ad-free Basic plan. Netflix has also used price hikes to encourage users to subscribe to its ad tier, where it has made more average revenue per user. Netflix with ads has cost $6.99/month since launching in November 2022 and has seen feature improvements, like moving from 720p resolution streams to 1080p. But subscription fees remain the biggest source of revenue for Netflix, giving it obvious reason to leave a door open for even more price hikes in the near future. Netflix has attributed its price hikes to added features, like 4K streaming and gaming. Meanwhile, Netflix's Premium ad-free plan increased from $17.99/month to $19.99/month in January 2022 and then to $22.99/month in October. In October 2023, that same plan went up to $11.99/month. In January 2022, Netflix increased the price of its Basic no-ads tier from $8.99 per month to $9.99/month. The statement will be unsavory for frugal streamers who have recently endured price hikes from Netflix and other streaming services. In the January 23 letter ( PDF), Netflix said:Īs we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service. In its Q4 2023 letter to shareholders, Netflix also revealed plans to eliminate the cheapest ad-free plan available to users. Netflix subscribers can expect more price hikes as the company looks to grow revenue in 2024.
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