Erik Gruenwedel

January 19, 2023

Netflix generated its highest spike in new domestic subscribers in almost two years following the launch of a lower-priced ad-supported option on Nov. 3, 2022, according to new data from Ampere Analysis.

London-based Ampere said the $6.99 tier, which is $3 less than Netflix’s basic ad-free plan, resulted in a 58% increase in new daily subscribers in the three days following the launch compared to the three days before the plan’s debut. Following those 72 hours, interest in the ad-supported tier dropped off to 8% of new Netflix subs — with 36% of those sign-ups being completely new to the service, and 64% switching from ad-free.

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Indeed, 25% of Netflix’s ad-supported subs switched from an ad-free plan, spearheaded by 67% coming from the $9.99 basic plan, 21% from the $15.99 standard plan and 12% from the $19.99 premium plan.

Ampere contends 75% of Netflix’s ad-supported subs also subscribe to at least three other services — led by Prime Video, Disney+ and Hulu.

Netflix has said it doesn’t expect the ad-supported option to have a material impact on subscriber growth until this year.

“Netflix’s [ad-supported] tier has succeeded at drawing back more price-sensitive subscribers who had previously churned,” analyst Mayssa Jamil said in a statement.

The analyst suggests that with increased competition from other ad-supported and ad-free SVOD services, Netflix’s $6.99 AVOD price makes it easier for subs — notably heavy stackers — to subscribe to multiple platforms.

“Some basic [ad-free subs], who are more prone to churning as economic uncertainty and competition increases, have been downgrading to the ad-tier, which will aid customer retention in the long-term,” Jamil said.

Netflix reports Q4 fiscal results today at the close of market trading.