Netflix’s ad tier boosts Q4 earnings

The Future. When Netflix’s ad-supported tier debuted last November, analysts thought it was off to a slow start. But Q4 2022 earnings results have shown that Netflix’s Basic with Ads plan helped them outperform their own expectations for revenue and subscriber numbers. In fact, the new plan just might help the streamer pull ahead of competitors.

By the numbers
Variety examined Netflix’s performance since the launch of the Basic with Ads plan.

• On the plan’s November 3rd debut, Netflix saw its highest daily US subscription sign-up rate since April 2020. Over the next two days, daily sign-up volumes grew 58%.
• 8% of customers signing up or switching Netflix plans have opted for the ad tier. 75% of these customers are new sign-ups, and most are re-subscribers (lapsed subscribers convinced to sign up by the ad-supported tier).
• Netflix had “healthy viewing hours” from November to December 2022, mainly because of the hit show Wednesday.

Netflix mobile app downloads fell just 12% in Q4, which wasn’t as bad as the streamer expected.

Aiming higher
Netflix isn’t providing subscriber guidance anymore, so analysts will mainly be focused on the streamer’s revenue and earnings guidance for the next quarter. Some have raised their 12-month price targets for Netflix in response to this new information.

Netflix wants to grow revenue while minimizing churn. The ad-supported tier has done the second very well, but it will only accomplish the first if Netflix keeps coming out with hits like Squid Game, Wednesday, and Stranger Things.