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· Posted on
February 21, 2024

Netflix sees a big jump in its cheaper tier subscribers despite initial (ad)versity

Nearly 20% of all Netflix's US subscribers have signed-up for its less costly subscription.

What's the key learning?

  • When Netflix launched its ad-supported tier, there wasn't a huge amount of fanfare... but now, nearly 20% of new US subscribers have signed up for it.
  • The biggest fear for Netflix and its investors was that its ad supported customers would cannibalise its existing offering - and for many existing customers to downgrade means less revenue for them.
  • Market cannibalisation happens when a company introduces a new product or pricing structure that displaces one of its existing products.

👉 Background: Netflix launched its ad-supported tier in November last year to.. not a huge amount of fanfare.

👉 What happened: Now, nearly 20% of all new U.S. subscribers have signed-up for the less costly subscription - but still behind Disney+.

👉 What else: The biggest fear for Netflix and its investors was that its ad supported customers would cannibalise its existing offering.

What's the key learning?

💡 Market cannibalisation happens when a company introduces a new product or pricing structure that displaces one of its existing products.

💡Experts were concerned that this new Netflix tier would cause many existing customers to downgrade… meaning less revenue for the Flux.

In November last year, which was launch month, 43% of their first ad-supported customers were downgraders from the premium plan.

💡But since then, most subscribers to Netflix's ad-supported tier are new users or lapsed users. So, the risk of cannibalising its existing pricing structure looks to have been saved!

‍

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All information contained in the Flux app, www.flux.finance, www.joinflux.com, app.flux.finance and any podcast of Flux Media Pty Ltd (ABN 27 639 804 345) is for education and entertainment purposes only. It is not intended as a substitute for professional financial, legal or tax advice. Flux Media Pty Ltd is the owner of the registered trade mark, 'What the Flux'. While we do our best to provide accurate information on the podcast, we accept no responsibility for any inaccuracies that may be communicated.
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