After a slow start for the ad plan launched last year, analysts said they expect Netflix will raise prices of its ad-free options in the coming months to nudge more subscribers to the other tier, where commercials help bring in more revenue per user.
So far, most viewers subscribing to Netflix after the password crackdown have opted for the ad-free plans, analysts said. Its standard plan with ads costs $6.99 a month, while the ad-free plans start at $15.49.
“Using these tactics, Netflix will likely double its ad-supported viewership next year,” said Insider Intelligence analyst Ross Benes. He expects Netflix to show more ads to users over time, catching up with rivals.
The ad tier is expected to bring in some $188.1 million in revenue in the third quarter ended September, with subscriber additions of 2.8 million, according to Visible Alpha estimates.
Overall, Wall Street expects the streamer to post its strongest quarterly subscriber additions this year, according to LSEG data.
Revenue in the third quarter likely rose 7.7% to $8.54 billion, the fastest growth in five quarters, thanks to strong programming that included the latest seasons of “Sex Education” and “Virgin River.”