Netflix’s ad-supported tier targets young families

Disney+ and Netflix have now confirmed plans to launch a cheaper, ad-funded tier alongside their usual subscription service in a range of markets, with both set to launch in the USA by the end of 2022. Netflix also recently announced that subscribers taking its ad-funded tier won’t see adverts when watching via a child’s profile, or around content aimed at under 13s, bringing the streamer’s plans in line with rival Disney+.

Young families have long been a valuable audience for SVoD platforms, with 95% of USA households with children under 10 reporting having access to at least one such service. On average, this group of subscribers also take more subscription video services; 5.1, against a market average of 4.5. This extra choice creates a potential issue, though: 46% of families report that they feel overwhelmed by the number of services they have access to, compared to 38% in the USA overall.  This could lead to families looking to drop services, particularly with the cost of living increasing worldwide.

Cheaper ad-funded tiers could prove an effective way for families to reduce their spend on video services. 60% of households with young children in the USA said they would be willing to see adverts if it made a subscription cheaper, compared to a 49% average in the market overall. Keeping adverts away from kids content, but running them against the rest of the available titles, allows Netflix and Disney+ to provide a cheaper service for households looking to save money, without lessening their appeal for family viewing.