Omdia: Ad tier now driving Netflix growth

One Day (Source: Netflix)

Netflix’s launch of an ad-supported tier in late 2022 and crackdown on account sharing has driven growth and “future resilience” in the UK & US over the past year, following a decline in subscribers, according to a new report by research powerhouse Omdia.

After a sustained period of growth in subscriptions triggered by the pandemic, Netflix had, like many other services, seen a slowdown in growth.

However, the One Day streamer’s US subscriptions numbers rose by 5.5 million (from 66.94 million to 72.4 million) during 2023, following a loss of subs on the previous year. The UK, meanwhile, gained 1.8 million subscribers after low gains in 2021.

According to Omdia’s media & entertainment research director, Maria Rua Aguete: “All industries and economies tend to move between waves of growth and pools of stagnation, and SVOD is no exception.

“The introduction of ad tiers allow subscribers who didn’t consider before full price tiers to subscribe to a cheaper alternative with almost the same content – more than 30 % of Netflix new additions come from the ad tiers.”

What’s more, Omdia’s report found that Netflix ad tier users are streaming more than those on the cheapest SVOD plan in the US and other major markets.

(Source: Omdia)

Presenting the findings at the Connected TV World Summit in London today, Rua Aguete revealed that, on average, accounts subscribed to Netflix’s $6.99 per month Standard with Ads plan are watching around 30 minutes more per day in the US than those on the $11.99 per month Basic tier – which will soon be discontinued in the US & Canada.

US Netflix users on the ad tier watch 100.9 minutes as opposed to the 73.1 minutes per day of those on the Basic tier. In the UK, ad tier viewers were also higher at 86 minutes vs 78.6 minutes, while in Spain the average was 95.3 minutes over 71.5 minutes.

Meanwhile, US viewers on the $15.49 per month Standard tier watched a comparative average of 101.8 minutes per day. In the UK and Spain, these figures rose above ad tier average minutes to 94.2 and 113.1 minutes, respectively.

Premium accounts watched more minutes than any other tiers but also have more users per account.