For years, Netflix has avoided advertising, relying solely on subscriptions. However, as the company grows, it struggles to maintain its expansion. In 2022, Netflix introduced a new affordable plan partly funded by user subscriptions and partly by advertising. This move helps attract new subscribers and retain existing ones, while also tapping into the lucrative advertising market.
- According to Bloomberg, Netflix is “talking” about a 100% free version funded by advertising.
- However, this is still just a discussion without a defined plan at the moment.
- The latest official figures show that Netflix’s ad-supported subscription already has over 40 million members, but Netflix aims to expand the audience that advertisers can target on its platform.
- After launching its affordable, partially ad-supported offer, Netflix realized that this business model is extremely lucrative.
Currently, Netflix is internally discussing the possibility of launching a completely ad-supported, 100% free offer. According to a recent Bloomberg article, Netflix tested a free version of its platform in Kenya but ended the experiment. Citing sources familiar with the matter, the American agency reports that Netflix is considering a free offer to increase its user base in Europe and Asia. However, Bloomberg notes that these discussions are preliminary and not yet a concrete plan. As always, since this information doesn’t come from an official source, it should be taken with caution.
Why would Netflix launch a free version?
Netflix is now the market leader, and its affordable ad-supported subscription is gaining popularity. In May, Netflix announced that this subscription option had surpassed 40 million subscribers, up from 23 million in January, and just 5 million the previous year. Over 40% of new subscriptions in available regions are for the ad-supported plan.
Netflix aims to expand the audience that advertisers can reach on its platform, developed in collaboration with Microsoft. Currently, this audience is smaller compared to its competitors in online advertising. A fully ad-supported, free version could help Netflix meet its new targets. Additionally, such an offer would cater to users who can’t afford a subscription or lack an online payment method.
Financially, a free, ad-supported version could significantly boost Netflix’s revenue. After launching the basic ad-supported subscription, Netflix discovered that online advertising is highly profitable. In April 2023, the company reported that a user of the ad-supported plan generates more revenue than a user of the Ad-Free Essential plan, which has since been discontinued. In the U.S., a subscriber who watches ads even generates more revenue for Netflix than a Premium subscriber.
