Netflix Estimating 40 Million Viewers for Ad-Supported Tier

Netflix is estimating that there will be 40 million viewers for their ad-supported tier. In an article from the Wall Street Journal, the company is pulling back the curtain on their most recent gambit. When news of a reported November release to the tier surfaced, fans were skeptical. Some of the proposed pricing sits as low as $7. But, there are some people that were unmoved citing some of the other troubles for the streamer. These numbers from Netflix would seem to cast the situation in a better light. For some people, sheer economy is going to win out when they are presented with such an opportunity. If they can get the service for a little bit cheaper, but have to endure ads, they will gladly sit through some preroll footage to watch Stranger Things, Squid Game, or The Umbrella Academy. The test will be when those heavy-hitters are out of season.

Earlier this year, the CEO made some comments about a possible ad-supported tier before the news became set in stone. It feels like the entire industry is drifting that way. "Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription," Reed Hastings shared. "But as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant get what they want, makes a lot of sense. It is pretty clear that it is working for Hulu. Disney is doing it, HBO did it. We don't have any doubt that it works."

Netflix clarified what shareholders could expect in a previous press release. "Our revenue growth has slowed considerably as our results and forecast below show." They also told investors that shortcomings could be due to password-sharing in the meantime. (Although there's very little evidence to back up this claim made available to the public.)

"Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds," they added. "The big COVID boost to streaming obscured the picture until recently. While we work to reaccelerate our revenue growth – through improvements to our service and more effective monetization of multi-household sharing – we'll be holding our operating margin at around 20%."

Will you be using the Netflix ad-supported tier? Let us know down in the comments!