Netflix’s US ad tier launch delivers highest sign-up rate since April 2020

Mumbai: OTT platform Netflix recorded its highest daily subscription sign-up rate in the US since the start of the pandemic in April 2020 with the launch of its ad-supported plan on 3 November, according to a new report by Ampere Analysis.

Specifically, the release of the ad tier led to a 58 per cent increase in the streamer’s average daily sign-up volumes from 3rd to 5th November, compared to the three days before the launch.

Since the new plan became available to subscribers, eight per cent of those who signed up for Netflix or switched plans have chosen the ad-tier. Of these, three out of four are new signups, mostly re-subscribers (64 per cent) but also first-time users of the platform (36 per cent).

According to the study, over 75 per cent of new ‘Basic with ads’ subscribers are stacking at least three subscription video on demand (SVoD) services, with Amazon Prime Video, Disney+ and Hulu being the most common other choice.

Tier switching: One in four of the ad tier subscribers are existing Netflix users that have switched tiers. As expected, a large proportion (67 per cent) of these come from the basic tier – the most price-sensitive group of Netflix subscribers. One fifth of switchers (21 per cent) moved from the standard tier, and just 12 per cent come from the premium tier.

Ampere Analysis analyst Mayssa Jamil said, "Netflix’s ‘Basic with Ads’ tier, which is $3/month cheaper than the basic tier, has succeeded at drawing back more price-sensitive Netflix subscribers who had previously churned. In addition to this, with the strengthening of competitor services, the low $6.99 price point makes it more affordable to subscribe to multiple services at once and has therefore also appealed to heavy stackers. Finally, some basic tier users (who are more prone to churning as economic uncertainty and competition increase) have been downgrading to the ad-tier, which will aid customer retention in the long-term."