Netflix says its ad-supported plan now has 15 million monthly active users

Los Angeles, CA - October 18: A Netflix building along Sunset Boulevard, in Los Angeles, CA, Wednesday, Oct. 18, 2023. (Jay L. Clendenin / Los Angeles Times)
Netflix says its ad-supported tier has increased to 15 million global monthly active users a year after the plan's launch. (Jay L. Clendenin / Los Angeles Times)

Netflix on Wednesday said its ad-supported tier has increased to 15 million global monthly active users a year after the plan's launch, triple the amount that the Los Gatos, Calif.-based streaming video giant disclosed in May.

The streamer, which for years resisted commercials on its platform, launched a cheaper, ad-supported tier in November 2022.

Netflix has not disclosed how many actual paying subscribers it has on its ad-supported tier, which costs $6.99 a month, compared with $15.49 for the standard ad-free version. Monthly active users would include other household members on a Netflix's subscriber's account that have set up Netflix profiles.

Read more: Netflix adds 9 million subscribers in third quarter despite Hollywood strikes

Last month, the company said the number of subscribers to the ad-supported plan continued to grow in the third quarter, with membership up almost 70% from the second quarter. The ad-based tiers account for roughly 30% of sign-ups in the countries where Netflix offers its service with commercials.

Netflix launched its cheaper plan with commercials after it had lost subscribers in the first half of 2022. Rivals, including NBCUniversal's Peacock and Paramount Global's Paramount+, had already offered commercial-supporter tiers. Warner Bros. Discovery's Max and Walt Disney Co.'s Disney+ have ad-based subscriptions as well.

Netflix executives have acknowledged that its ad-based business has a ways to go before reaching its goals.

“We’re definitely in our infancy, and it’s definitely not at the scale that we want it to be at yet,” Netflix co-Chief Executive Ted Sarandos said at the Bloomberg Screentime conference.

Last month, Netflix announced the exit of Jeremi Gorman, who was credited with building the streamer’s ads business, and said Amy Reinhard, Netflix’s former vice president of studio operations, would be president of advertising.

Over the past two years, streaming services have raised prices on ad-free plans as the growth in subscribers has slowed down.

Netflix in July canceled its cheapest ad-free basic plan for new or returning users in the U.S. and U.K. and last month raised the prices on its monthly premium plan by $3 to $22.99 and the basic plan by $2 to $11.99 a month. The company did not change the price on its ad-supported or standard plans, which remain at $6.99 and $15.49 a month, respectively.

Read more: The cheap streaming era is over. Here's why your bills are going up

On Wednesday, Netflix said it will increase options for advertisers. The company started its ad plan with 15-second and 30-second ads, and will now offer 10-, 20- and 60-second ads. In the U.S., advertisers will also be able to show QR codes next year. Sponsorships will also be available globally next year.

"Our goal isn’t just to offer the same products and tools the industry has come to expect — although we’ve made a lot of progress on that front over the last year," wrote Reinhard in a blogpost on Wednesday. "It’s to build something bigger and better than what exists today."

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This story originally appeared in Los Angeles Times.