Streaming giant Netflix said it is happy with the uptake of its ad-supporting tier and believes it will drive “at least 10 per cent” of its annual revenue within time.
During a quarterly analysts call, executives compared the service to Hulu, and noted that almost half of Hulu’s subscribers are using its ad-supported plan.
“I just want to emphasise, it’s a multi-year path,” said CFO Spencer Neumann.
“We’re not going to be larger than Hulu in year one.
“It is a multi-billion dollar business for Hulu. That is U.S.-only — so lower reach, lower engagement than us.
“Given what we have seen and the engagement on our ad plan…we would expect to be as large or larger over time.”
Netflix’s new co-CEO Greg Peters said they wouldn’t have launched the tier unless they expected it to account for “at least ten per cent of annual revenue” over time. He also explained the ad-supported plan’s engagement rates are comparable to those of its other plans.
“So that’s really a promising indication,” he noted.
“It means we’re delivering a solid experience and it’s better than we modeled and that’s a great, sort of fundamental starting point for us to work with.”
Netflix added 7.7 million paid subscribers over the December quarter, after subscribers dropped at the start of 2022 for the first time in a decade.
