Netflix refunding advertisers as ad-funded tier underperforms in Australia

Media reports suggest Netflix’s Basic with Ads subscription tier, which launched in November, has underperformed by as much as 70% in the first three months of operation.

The underwhelming performance has been attributed to lower-than-expected subscriptions, a lack of inventory and the absence of an established product.

The launch of the global ad-funded tier presented consumers with a $4 saving on the streaming giant’s basic package in return for advertising. The Basic with Ads package is priced at $6.99, while the Basic package is just $10.99.

However, it is not just Australia where the ad subscription model has failed to match expectations. Media reports from last year suggested the offering was off to a slow start globally due to a lack of inventory and subscribers.

Netflix announced the introduction of the advertising tier last year, following the increased competition in the streaming content market, with Disney+ and Paramount+ both expected to launch ad-funded packages.

However, media experts claim the service is beginning to kick into gear and forecasts for the next few months are improving. Subscriber numbers are also predicted to experience a spike as Netflix roll-outs the anti-password sharing technology which will stop multiple users from sharing accounts.

Netflix launched the technology in New Zealand last week, with plans to roll it out in Australia “in the coming months”.

After years of denying it would introduce advertising to the platform, Netflix was forced to rethink its strategy last year, in the wake of increased competition from the likes of Disney+ and Paramount+. Disney+ launched its advertising tier in the US in December and is expected to launch into other markets this year.