- April 25, 2022

What Does Netflix Subscriber Loss Mean for Ad-Supported Revenue Models?

Courtney Gursky
Courtney Gursky
Senior Marketing Content Specialist

Last week, streaming giant Netflix reported its first major loss in subscribers in over a decade, leading many to question the trajectory of this powerhouse brand and even the industry. What does this setback mean for the future of Netflix and the other major streaming players as they explore new models to drive revenue while maintaining a strong connection with consumers?

In this blog, we explore ad-supported vs. non-ad-supported streaming service household viewership and the current state of Netflix’s brand penetration and engagement, and how these overlap with top competitors. The most interesting angle of all this will be if Netflix's newly introduced ad model will be the key to winning back subscribers.

Who is winning in ad-supported vs. non-ad-supported services?

After the drop in subscribers, Netflix is exploring adding a less expensive, ad-supported tier to its current offering, following in the footsteps of Hulu and Disney+. This could be a game-changing move for Netflix considering that nearly half of its subscribers said they would choose an ad-supported plan for $5 less per month, according to a June 2021 survey from Hub Entertainment Research.

The data below shows a comparison of the number of households that watch non-ad-supported services with the number of households that watch ad-supported services. Currently, ad-supported services, including Hulu, HBO Max, and Peacock, are winning the streaming battle in terms of reach. This number will only continue to grow in the coming months as more audiences seek out lower-cost or free ad-supported options and subscription providers such as Disney+ introduce ad-supported tiers to offset inflation concerns.

Household Penetration Snapshot for Ad-Supported vs. Non-Ad-Supported Streaming Services

Reach of ad-supported* services: 75.3M households in February 2022

Reach of non-ad-supported services: 74.7M households in February 2022

Source: Comscore OTT Intelligence™, February 2022, U.S.

What can we learn from Netflix audience overlaps?

While Netflix is still the most popular streaming platform available, other streaming services are quickly gaining ground. As the chart below shows, Netflix’s audience overlap with competitive OTT services** has been steadily increasing. This begs the question, have we potentially reached a tipping point where consumers with a multitude of streaming services will begin to cut back on their subscriptions?

Netflix Audience Overlap with Other OTT Services

Will an ad-supported plan win back subscribers?

Despite the recent decline in Netflix subscribers, people are still spending a significant amount of time watching programs on the streaming service.

As of February 2022, Netflix had the highest share of total CTV viewing hours compared to its top rivals. This means Netflix is still an attractive streaming platform and may only increase in popularity if it offers an ad-supported tier as a more attractive price point.

Share of Total Viewing Hours in February 2022

Netflix viewership has also remained relatively stable over time, indicating that the platform is solid in terms of monthly engagement with its content. From a monthly view of households watching Netflix, Comscore CTV measurement shows that Netflix continues to reach a massive number of U.S. households.

Total CTV Viewing Households for Netflix

With more options for streaming content than ever before and pricing increasingly top of mind for viewers, streaming service providers are making pivotal decisions between adding lower-cost ad-supported tiers or keeping a non-ad-supported model. While data shows that non-ad-supported services today hold the attention of a large number of CTV households, services like Disney+ have already announced their intention to change their pricing structure.

With these changes ahead and as more streaming platforms enter the fray, Netflix may find itself engaged in an increasingly expensive battle for consumers’ attention. What’s notable is that even with a dip in subscribers, consumption data still shows stability in the number of CTV households that remain engaged with Netflix content: more households watch more hours a month of Netflix than any other CTV service.

If you would like more information about the insights we shared in this piece and the products that powered them, contact a Comscore expert today.

*Comscore defines ad-supported services as any service that enables an ad-based tier, such as Hulu.

**YouTube data includes YouTube TV, and Hulu data includes Hulu Live TV.

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