If recent reports are to be believed, Netflix's (NASDAQ: NFLX) new ad-supported video-on-demand (AVOD) plan is not doing well. The streamer rolled out its $6.99 Basic with Ads tier on Nov. 3, 2022, but according to data from analytics company Antenna, just 9% of Netflix sign-ups last month opted for the offering. The news follows a Digiday piece in which multiple sources say Netflix is returning money to advertisers, because Basic with Ads missed initial projections.

Before Netflix launched Basic with Ads, there were articles suggesting the company was eying 40 million customers for the service by the end of 2023. Many Wall Street analysts were also bullish on the streamer's move into ad-backed content with MoffettNathanson estimating Netflix could see as much as $2.7 billion in ad-based revenue by 2025. So, has Netflix really dropped the ball with its AVOD service? Let's break it down.

To understand what's going on with Netflix's AVOD venture, it's important to understand how the streaming company arrived at this point.

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Source Fool.com