Netflix is updating its ad-supported plan for streaming quality and concurrent streams. The company said users subscribing to this plan will be able to view content in 1080p resolution (instead of 720p) with support for two simultaneous streams.
These benefits are being rolled out today to users in Canada and Spain. People on ad-supported plans in 10 more markets, including the US, will get these features this month.
“We believe these enhancements will make our offering even more appealing to a broader set of consumers and further enhance advertising engagement for existing and new subscribers,” the company said in its investor letter.
Netflix launched the ad-supported plan last November at $6.99 per month and it’s already seeing positive results.
The streaming company said that in the United States, it earns more average revenue per subscription from the ad-supported plan than the standard plan, which costs $15.99 per month.
During the earnings call, Netflix chief financial officer Spence Neumann said the company rolled out new content on the ad-supported tier in the last quarter, bringing it to “95% more par.” ” with other more expensive plans.
He mentioned that the ad-supported plan also shows beneficial results for the business,
“This [economics of the ad-supported plan] is all on a level that we believe is not just better for our members with a lower priced option, but better for our business and we think we could do it with and do it in a way that, I would say, without being too specific, consider it an additional contribution of 50% or more to the company’s profits,” he said.
According to Insider Intelligence, Netflix will bring in $770 million in ad revenue this year, and that figure will rise to $1.9 billion in 2024.
Netflix Ad Revenue Picture credits: Insider information
The company expects Netflix to have 170.6 million users (0.5% YoY decrease) in the US and 682.7 million users worldwide (5.6% increase year-over-year) by the end of the year.
The company also unveiled plans to roll out password-sharing restrictions more widely this summer. The company posted revenue of $8.16 billion for the first quarter of 2023, slightly below analysts’ expectations of $8.18 billion.
