Netflix cheaper plan with ads not helping in revenue growth, struggling to bring new subscribers

Gone are the days when having a Netflix subscription was a luxury and the OTT platform truly enjoyed a high subscriber base compared to most other digital platforms. However, now with the emergence of a line-up of new OTT platforms like Amazon Prime Videos and Disney Plus Hotstar, Netflix is struggling to hold and magnate more subscribers. The macroeconomic conditions, inflation, and rising costs of financing production are making the over-the-top streaming platform struggle to reach its set revenue target. A recent report by Reuters reveals that Netflix, which has been struggling to keep up with revenue growth since last year, is expected to report its slowest quarterly revenue growth in the coming report. The video service platform is “expected to have added 4.5 million subscribers in the fourth quarter – the lowest addition for the holiday period since 2014. It added 8.3 million subscribers a year ago,” the report by Reuters added.

This comes after the newly added ad-supported plan struggles to attract more subscribers and customers in the saturating US market. This could further pressure Netflix to pull back on its yearly content spending in the coming FY as part of cost-cutting. According to the report, Netflix has been struggling with low consumer spending, rising costs of financing production, and increased competition from Disney Plus and Amazon Prime since the start of the current financial year. To curb the falling rate of revenue growth, the platform introduced the ad-supported tier which offered access to streaming platforms for a cheaper price range. But these new plans have shown no significant impact on the company’s revenue graph.

Analysts say that the new monthly ad-supported plan priced at Rs $6.99 in the US does not offer access to all the titles to users. Additionally, while the plans are cheaper compared to Netflix’s traditional plans, the ad-supported tier is still not seen as of value by significant numbers of customers in the United States and Canada. “Looking at the saturation of the market and the variety of different options available, and the fact that the pricing is not necessarily significantly below the competition, there are some challenges in attaining those subscriber targets,” said Jamie Lumley, an analyst at Third Bridge.

Netflix ad-supported plan details:-

Netflix’s new Basic plan ads is only available in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the United Kingdom, and the United States. The plan proceeds at $6.99 a month in the US. It offers a range of OTT content available on Netflix and can be accessed on TV and mobile devices. For Indian users, Netflix offers a mobile-centric plan at Rs 149. It is the cheapest Netflix plan available in India and offers standard video quality with 480p streaming on a phone or tablet. The plan only allows access to Netflix one device at a time.