An initial analysis of Netflix’s new ad-supported Basics with Ads plan shows it having driven the streaming service’s highest daily subscription sign-up rate in the U.S. since the start of the pandemic in April 2020 — largely driven by returning subscribers.
The $6.99-per-month ad-supported tier led to a 58% increase in the streamer’s average daily sign-up volumes between November 3 and 5, as compared to the three days prior to the launch, according to Ampere Analytics’ Subscription Video Economics application, which tracks daily sign-up and cancellation activity of streaming services in the U.S. using a panel of several million households.
Since the launch, 8% of subscribers signing up for Netflix or switching to a different Netflix plan have opted for the ad-supported tier.
Of these, 75% were sign-ups, consisting of 64% “re-subscribers” (consumers identified as having previously subscribed to the platform during their time on the panel), and 36% were first-time subscribers.
As expected, among the 25% who switched from another plan to the with-ads tier, most (67%) were Netflix’s most price-sensitive subscribers—those who had been on the $9.99-per-month Basic (no ads) plan. About a fifth (21%) moved from the Standard ($15.99) plan, and just 12% came from the Premium ($19.99) plan.
The study also found that more than 75% 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 choices.
With its $3-per-month cheaper price, Basics with Ads has drawn back more price-sensitive Netflix subscribers who had previously churned, and been adopted by current Basic tier users who would be more prone to churn as economic uncertainty and competition from competitive ad-supported services increases, notes Ampere analyst Mayssa Jamil.
“In addition, 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,” Jamil says.