After only a couple of months of availability, Netflix seems pleased with early returns on the streaming service’s new ad-based tier. Company executives believe the low-priced subscription option–$7 monthly in the United States–could bring in over $3 billion each year in the future.
Deadline reports that Netflix co-CEO Greg Peters talked about the success of the ad-based tier during the company’s fourth-quarter earnings interview. He said growth of the new cheap option is “solid,” bringing in new subscribers instead of current members switching. Additionally, their engagement matches what’s seen from higher-paying customers so far.
“We’re just getting started,” Peters said. “We’re constantly improving, and we see the trajectory ahead of us.”
Looking ahead, Netflix CFO Spence Neumann knows that Hulu is a top competitor in the ad-based TV streaming space, especially with “a long head start.” But Neumann believes Netflix will catch up. “We’re not going to be larger than Hulu in Year 1, but we would expect to be as large or larger over time, certainly, in just our U.S. market, and more from there.”
Netflix added over 7 million subscribers in its fourth quarter, the first one with the ad-based tier available. Netflix with ads launched in November, with commercial length roughly equaling four minutes per hour.
That’s not all that’s happening with the company, either. Netflix founder and co-CEO Reed Hastings is taking over a new role as executive chairman. And the streaming service is planning to crack down on password-sharing.
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