Just six months after introducing a subscription option that includes ads, Netflix ad tier has reported a strong uptake of the cheaper plan. 

At its inaugural upfront event for advertisers, the streaming company celebrated recent future-proofing of its business model. The ad-inclusive plan now has nearly five million users globally, with a quarter of all new subscribers valuing a cheaper plan over uninterrupted streaming.

Netflix president of world advertising Jeremi Gorman says the focus is on “building a forever business”.

“We worked hard to be brilliant at the basics, focusing on areas advertisers told us matter most – like geo, age, and gender targeting; third-party verification and deploying the right brand suitability mechanisms,” says Gorman.

Later this year Netflix will give advertisers access to advanced campaign audience metrics as it seeks to grow this section of its business. 

Netflix ad tier: A sign of the times?

Netflix began offering an ad plan at the end of 2022 after subscriber numbers declined, likely due to increased competition and the ongoing cost of living crisis. In exchange for four to five minutes of ads per hour, Netflix customers can reduce their subscription cost to $6.99 per month.

These plans are currently available only in Australia, Brazil, Canada, France, Germany, Italy, Japan, South Korea, Mexico, Spain, the UK, and the US. But this promising start may herald a global rollout.

Now that it’s clear we’re willing to put up with ads while streaming, other companies seem willing to follow suit. Disney Plus offers a similar ad-supported plan in the US, but this has yet to make it to other markets.

In Australia Binge recently joined Netflix by including ads in its entry-level ‘BINGE Basic’ plan, however it chose not to launch a new cheaper tier, instead forcing existing subscribers to upgrade their subscriptions to retain ad-free streaming. 

Still on top

Netflix sold itself to advertisers as the market leader in streaming, pointing both to dominance of Nielson’s Top 10 most watched lists in 2022 and its varied programming.

“No other entertainment company aspires to create great movies and shows across so many genres, in so many countries, and for such a broad, diverse audience,” says chief content officer Bela Bajaria.

Netflix remains the most popular streaming service in Australia with 65 percent of people subscribed, leading next best Disney Plus at only 35 percent.

At the event Netflix also announced the return of several established series and highlighted a schedule of originals set to be released throughout the year.