Following reports of a slow start, traction on Netflix’s ad-supported streaming plan ticked up to reach 1 million monthly users two months after launch, according to company data viewed by Bloomberg.
Netflix charges $6.99 per month for its plan with ads, which launched last November as the SVOD looks to new ways to generate revenue growth. Bloomberg on Sunday cited internal Netflix data reviewed by the outlet that showed the ad-supported plan had reached around 1 million monthly active users. It also reported that the streaming service met audience forecast deliveries to advertisers, according to people familiar with the matter.
Bloomberg indicated that this doesn’t translate directly to signups for the plan with ads, saying that the 1 million monthly active users figure is at least one month old, includes multiple people using one account and is only for the U.S. Netflix users.
According to earlier data from Antenna most of the people are not those trading down, but instead new or lapsed customers, with the ad tier accounting for 20% of new Netflix signups in the U.S. As Netflix already counts 74.2 million users in the U.S. as of the fourth quarter, it’s also turning to password sharing crackdowns as a way to drive new revenue. The SVOD giant plans to implement charges for users sharing accounts as a way to monetize an estimated 100 million households that are using other subscribers’ login credentials.
Growth on the ad-supported plan would be good news as initial uptake appeared tepid with Netflix reportedly refunding some advertisers money when it wasn’t able to meet viewership guarantees.
In other moves on the advertising front, Digiday recently reported that Netflix is considering a potential shift away from ad tech and sales partner Microsoft as it considers building out its own and bringing ad tech operations in-house.
Speaking during fourth quarter earnings, Netflix’s new co-CEO Greg Peters said Netflix is hoping to get to the “walk” stage in their “crawl-walk-run” approach to ads, with much work to do including improvements to ad delivery validation, measurement, and targeting, as well as experience enhancements.
Peters also talked about enhancements to “nuts and bolts” aspects, such as improving the ad sales and operations processes in partnership with Microsoft to serve an increased number of advertisers and demand.
“We’re just getting started, we’re constantly improving and we see the trajectory ahead of us,” Peters said in January.
One of Netflix’s ad plan partners, DoubleVerify on Monday announced that its measurement tools are now available for all Netflix advertisers. Netflix previously disclosed tapping the vendor to verify viewability and traffic validity on the ad-supported plan.
According to DoubleVerify, with the new release, Netflix advertisers can ensure their videos are safe from fraud and invalid traffic, and fully viewable by real people.
“Netflix is one of the world's largest streaming services and we are excited that our industry-leading solutions are now widely available for their advertisers,” said Mark Zagorski, CEO of DoubleVerify, in a statement. “Our partnership ensures that campaigns on Netflix fulfill essential quality standards that drive optimal outcomes.”
Another Netflix ad tech partner, Integral Ad Science, on Monday also disclosed that it launched Viewability and Invalid Traffic verification for the streamer's ad-supported plan, with the similar aim of ensuring that ad campaigns are fraud-free and seen by real viewers.
And Netflix isn’t the only streamer pursuing an ad-supported model. Leading SVOD Disney+ launched its own tier with ads, priced at $7.99 per month, in December about one month after Netflix. When that happened Disney raised the price of its ad-free plan by $3 per month – a price hike that apparently didn’t deter existing subscribers. According to data from Antenna, as reported by The Wall Street Journal, about 94% of subscribers to the ad-free plan absorbed the monthly price increase.
Respective moves to ad-supported models by Disney and Netflix could attract users that want to keep the service but at a lower cost, as recent data from Aluma Insights found Netflix is considered the most essential SVOD service by 66% of surveyed households, followed by Hulu (53%) ad Disney+ (52%) as the top “must-have” streaming services.