Netflix’s Ad-Supported Tier Reaches 70 Million Users, Showcasing Remarkable Growth

Netflix’s ad-supported subscription tier has reached a milestone, now engaging 70 million global monthly active users just two years after its launch. This figure reflects rapid growth from 22 million users in January and 40 million in May, underscoring the streaming giant’s successful expansion strategy.

Netflix launched the tier in November 2022 as a strategic response to a slowdown in subscriber growth, a challenge that has since reversed. Netflix exceeded Wall Street’s expectations by gaining 5.1 million subscribers during the third quarter, bringing its total membership to 282.7 million across all tiers, as reported just last month.

Amy Reinhard, Netflix’s President of Advertising, emphasized that ad-supported programs now account for more than half of new sign-ups in the relevant markets. U.S. advertisers are particularly interested in the tier’s ability to deliver more localized impressions, although global numbers reflect this upward trend.

Netflix’s ad-supported tier has been profitable, as the company recently announced that it has sold out of its commercial inventory for the highly anticipated Christmas Day National Football League (NFL) broadcasts, which are part of a three-year agreement. The broadcasts will showcase a substantial advancement in live sports content, with Verizon serving as an advertiser and FanDuel serving as the exclusive preliminary sportsbook wagering partner.

Netflix is progressing in advertising technology by improving audience measurement and analytics. The company partners with VideoAmp, Nielsen, and local entities like Kantar Ibope CAV in Brazil and Barb in the U.K., facilitating comprehensive cross-screen and live audience monitoring. Netflix will use Nielsen-supported stats with its own statistics for U.S. NFL broadcasts.

In May, Netflix declared the initiation of its own advertising platform, signaling the conclusion of its collaboration with Microsoft for advertising technology. The new platform has been introduced in Canada, with intentions to debut in the U.S. by the conclusion of the second quarter of next year and to extend internationally by 2025. This transition seeks to enhance its proficiency in targeting, forecasting, and reporting, so facilitating more expansion in its advertising initiatives.

Netflix has indicated that starting next year, it would cease briefing investors on membership figures, prioritizing revenue and other financial measures as the main indications of performance. This action demonstrates assurance in its established subscriber base and a shift towards sustainable revenue expansion.

Netflix’s achievement with its ad-supported tier corresponds with wider industry trends, as media businesses progressively implement ad-based methods to entice subscribers with more economical plans and create supplementary advertising income. Although conventional television advertising has experienced a decline, digital and streaming platforms such as Netflix have demonstrated significant growth in this sector, propelling their trajectories towards profitability.