Netflix's ad tier reaches 15 million users a year after launch

Netflix (NFLX.O) said on Wednesday its ad-supported tier had reached 15 million active users per month, a year after the streaming giant launched the cheaper plan to revive subscriber growth and revenue following a slowdown.

The company had five million monthly ad-tier users in May and has been hiking prices on its ad-free options in an effort to nudge more subscribers to the other tier, where commercials help bring in more revenue per user.

Netflix increased subscription prices for some streaming plans in the United States, Britain and France last month, after its third-quarter subscriber additions of 9 million shattered Wall Street expectations of 6 million.

After resisting commercials for years, Netflix had a change of heart in April 2022 after it lost subscribers in the first quarter of the year.

A month after Netflix's ad-plan launch last year, rival Disney+ also rolled out its ad version in an attempt to push its streaming business into profitability.

Streaming services such as HBO Max, Paramount+ and Peacock also offer ad-supported versions of their services, emulating the business model that has long supported the television business.

Amazon's (AMZN.O) Prime Video will next year join its streaming rivals in rolling out ads and introducing a higher-priced ad-free tier.

Netflix said during its third-quarter results that the adoption of its ads plan, which costs $6.99 per month in the United States, continued to grow with membership up almost 70% sequentially. In countries where the ad plan was available, 30% of the signups were from the ad-tier.