Cheapest Netflix plan with ads not helping revenue growth

Once upon a time, a Netflix subscription was a luxury, and the OTT platform enjoyed a high subscriber base compared to most other digital platforms. However, now with the rise of a line of new OTT platforms like Disney Plus Hotstar, Amazon Prime Videos and Netflix is struggling to retain and attract more subscribers. Macroeconomic conditions, inflation and rising production financing costs are making the overhyped streaming platform struggle to hit its stated revenue target.

A recent report from Reuters shares that Netflix, which has struggled to keep up with revenue growth since last year, is expected to report its slowest quarterly revenue growth in the next report. The video services 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 added from Reuters.

This comes after the newly added ad-supported plan struggles to attract more subscribers and customers in the saturated US market. This could further pressure Netflix to reduce its annual spending on content in the next fiscal year to cut costs.

According to the report, since the current financial year, Netflix has been battling low consumer spending, rising production financing costs, and increased competition from Amazon Prime and Disney Plus. To curb the declining revenue growth rate, the platform introduced the ad-supported tier that offered access to streaming platforms for a cheaper price range. But these new plans have not significantly impacted the company's revenue chart.

Analysts say that the new ad-supported monthly plan priced at Rs $6.99 in the US does not offer access to all titles to users. Also, while the plans are cheaper than Netflix's traditional plans, many United States and Canadian customers still don't find the ad-supported tier valuable.

"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.

Details of Netflix ad-supported plan

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