Netflix’s cheaper ad tier is gaining momentum.
The company, which reported its fourth-quarter results on Tuesday, disclosed on its earnings conference call with investors that it has 23 million monthly users on its ad-based plan. That’s up from 15 million customers in November — a 70% jump from the third quarter, which itself saw a 70% sequential increase from the second period.
“We’re on a good trajectory,” Netflix co-CEO Greg Peters said on the call, adding that the company still has “plenty of room to grow in all of the markets we operate in.”
Netflix is keen to get as large a base of users on that ad tiers since the number of eyeballs will matter to advertisers. It’s why the $6.99 plan has remain unchanged in price for more than a year even as its premium plan got more expensive. The company is also expected to see another large swath of customers come in when T-Mobile switches all of its subscribers who have free Netflix on to the ad-based plan, with folks needing to pay extra to opt out.
Peters also suggested that Netflix would try to strike more bundling deals to get Netflix roped into other offers, and noted that the lower priced ad-tier makes the proposition more attractive to potential partners.
While Netflix took the approach of introducing an ad tier that people had to opt into, Amazon has taken the reverse approach and will show ads to everyone, with folks who want to opt out needing to pay $2.99 a month. Peters said that the company had considered the same approach, but given its history, he felt it was better to attract people to an ad-based plan rather than force everyone onto one.
“That approach is generally working well for our members,” he said. “We haven’t seen a big backlash.”