Netflix <3 ads

Netflix has yanked its basic plan with no ads in the US and UK, leaving three packages for consumers to choose from instead of four: a $6.99/month tier with ads, a $15.49/month standard plan with no ads, and a $19.99/month “Premium” plan that’s also ad-free.

The reason behind the move is simple – it positions the company to make more money.

• According to Netflix’s Q1 earnings report, users on its $6.99/month tier with ads generate more revenue for the company than any user paying $15.49/month for its standard ad-free plan – meaning the company makes at least $8.50/month in ad revenue per user.
• This figure probably has a lot to do with user engagement on the ads plan being similar to non-ads plans, since more time spent watching content in the app = more ads being shown.

And not only is Netflix’s plan with ads good for the company, users don’t appear to be turned off by seeing commercials in between binging episodes of The Crown. Around 5 million people globally are paying $6.99/month for Netflix with ads, and, according to co-CEO Greg Peters, more than a quarter of the streaming giant’s signups choose the ad-supported plan in countries where it’s available.

📸 Big picture: Netflix released Q2 earnings after the bell yesterday, reporting stronger than expected subscriber growth numbers – but a miss on revenue.