Netflix is in the process of upgrading its ad-supported plan in terms of streaming quality and simultaneous streams. The company said that users who subscribe to this plan will be able to see content in 1080p resolution (above 720p) with support for two simultaneous streams.
These benefits are rolling out to users in Canada and Spain today. People using the ad-supported plans in 10 other markets, including the US, will get these features this month.
“We believe these enhancements will make our offerings even more appealing to a broader set of consumers and further enhance the engagement of existing and new subscribers to the advertising plan,” the company said in its letter to investors.
Netflix launched the ad-supported plan last November for $6.99 per month and it’s already seeing positive results.
The streaming company said it earns more average revenue per membership in the US through the ad-supported plan than the standard plan, which costs $15.99 per month.
During the earnings call, Netflix’s CFO Spence Neumann said the company rolled out new content to the ad-supported level in the past quarter, putting it at “95% plus” parity with other higher-end subscriptions.
He said that the ad-supported plan also yields favorable results for the company,
“This [economics of the ad-supported plan] is all at a level where we think it’s not only better for our members with a cheaper option but better for our business and we think we can do it and are doing it in a way that I would say without all To be too specific, think of it as an incremental profit contribution of 50% or more to the company,” he said.
According to Insider Intelligence, Netflix will bring in $770 million in ad revenue this year, and that number will grow to $1.9 billion by 2024.
Netflix ad revenue Image Credits: Insider intelligence
The company expects Netflix to have 170.6 million users (0.5% year-over-year decline) in the US and 682.7 million users worldwide (5.6% year-over-year increase) by the end of the year.
The company also revealed plans to roll out restrictions on password sharing more widely this summer. The company recorded $8.16 billion in revenue for Q1 2023 — slightly below analyst expectations of $8.18 billion.