Netflix has achieved over 15 million monthly active users on its ad-supported subscription tier in just one year since introducing advertising on its platform.
This significant increase from the 5 million announced last May reflects the company’s pivot towards an advertising model. The ‘Basic With Ads’ tier experienced a remarkable 70% growth in the third quarter, signaling a shift in the streaming industry’s landscape.
While Netflix boasts a global subscriber base of 247 million, it has not disclosed the number of subscribers on the ad-supported plan, which initially launched in 12 countries before expanding worldwide, The Deadline reported.
The introduction of advertising in 2022 marked a significant departure from Netflix’s long-standing stance against running ads. After experiencing consecutive quarterly declines and a significant market value drop, the company partnered with Microsoft to roll out ads, a move later emulated by Disney+.
It’s now widely accepted that advertising plays a crucial role in sustaining the economic model of streaming platforms.
Netflix’s strategy also included charging customers for password sharing, a practice that had been previously tolerated for free. Interestingly, instead of paying the new fee for password sharing, many subscribers opted for the ad-supported plan.
This dual approach has led to a resurgence in Netflix’s quarterly subscriber growth, increased free cash flow, and higher profits.
Amy Reinhard, who was recently promoted to President of Advertising, emphasized the platform’s commitment to providing innovative advertising solutions. She highlighted recent product announcements, including the upcoming “binge ad” unit set to debut in the first quarter of 2024. This feature will allow viewers watching multiple episodes of a series in a row to enjoy the fourth episode without ads.
Additionally, Netflix has explored title sponsorships as a new advertising opportunity.
For instance, Frito-Lay became a sponsor of ‘Love Is Blind,’ incorporating its logos into the series’ title card.
Similar activations are planned for shows like ‘Squid Game: The Challenge’ and the upcoming final season of ‘The Crown.’
Furthermore, Netflix is venturing into live sports by presenting ‘The Netflix Cup,’ a golf competition on November 14, with sponsorship from T-Mobile, Nespresso, and other prominent brands.
The streaming giant continues to evolve and expand its advertising offerings as it seeks to build “something bigger and better than what exists today” in the streaming industry.