Netflix reportedly passes one million ad-supported subs

Netflix has reportedly passed the milestone of one million subscribers for its recently-launched low-cost ad-supported tier.

According to Bloomberg, citing internal company data, the user base for the service grew by 500% in the first month after launch and by another 50% in its second month.

Bloomberg also reported, citing unnamed sources, that Netflix had fulfilled its forecast deliveries to advertisers.

Bloomberg said that the one million active users of ad tier include multiple users of single accounts and did not include international users. The data it obtained was also one month old, it said.

According to research outfit Antenna, Netflix’s ad tier currently accounts for one fifth of new sign-ups for the streaming service. In the US, Netflix already has high penetration, so the impact of the ad tier may be lower than in international markets where penetration is lower, although the high penetration rate in the US also carries a risk that more people may downgrade from higher tiers.

The introduction of the ad tier was timed in part to coincide with Netflix’s launch of new measures to combat password sharing, with the assumption that some users linked to other accounts may opt to subscribe to the US$6.99 a month ad tier.

Netflix’s strategy with advertising contrasts with that of Disney, which timed the introduction of its ad-supported tier to an increase in the price of its existing non-advertising streaming offering.