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Netflix’s ad tier reaches 15 million users a year after launch

Photo: Netflix

A year after the streaming behemoth introduced the more affordable plan to spur subscriber growth and income amid a slump, Netflix (NFLX.O) announced on Wednesday that its ad-supported tier had hit 15 million active customers monthly.

In May, the firm reported five million monthly users of the ad tier. To encourage more users to upgrade to the other level, where advertisements generate higher income per user, the company has been raising the price of its ad-free choices.

After its third-quarter subscriber gains of 9 million, above Wall Street projections of 6 million, Netflix this month raised the price of its streaming plans in the US, UK, and France.

Netflix changed its mind in April 2022 after defying ads for years after losing customers in the first quarter of the year.

Rival Disney+ likewise launched its advertising version a month after Netflix did last year to drive its streaming division into profitability.

Ad-supported versions of these services are also available from streaming providers like HBO Max, Paramount+, and Peacock, which mimic the long-standing revenue model of the television industry.

Next year, Amazon’s (AMZN.O.) Prime Video will follow its competitor streaming services in implementing advertisements and launching a more expensive ad-free plan.

According to Netflix’s third-quarter data, membership has increased by about 70% sequentially, and the company’s $6.99/month advertising strategy is still being adopted in the US. Thirty percent of new users signed up from the ad tier in the countries where the ad plan was accessible.

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