Netflix said on Wednesday its ad-supported tier had reached 15 million active users per month, a year after the streaming giant launched the cheaper plan to revive subscriber growth and revenue following a slowdown. The company had five million monthly ad-tier users in May and has been hiking prices on its ad-free options in an effort to nudge more subscribers to the other tier, where commercials help bring in more revenue per user.
Netflix increased subscription prices for some streaming plans in the United States, Britain, and France last month after its third-quarter subscriber additions of 9 million shattered Wall Street expectations of 6 million. Netflix said during its third-quarter results that the adoption of its ads plan, which costs $6.99 per month in the United States, continued to grow, with membership up almost 70% sequentially. In countries where the ad plan was available, 30% of the signups were from the ad tier.
After resisting commercials for years, Netflix had a change of heart in April 2022 after it lost subscribers in the first quarter of the year. A month after Netflix's ad-plan launch last year, rival Disney+ also rolled out its ad version in an attempt to push its streaming business into profitability. Streaming services such as HBO Max, Paramount+, and Peacock also offer ad-supported versions of their services, emulating the business model that has long supported the television business. Amazon's Prime Video will next year join its streaming rivals in rolling out ads and introducing a higher-priced, ad-free tier.
In a blog post today marking one year of Netflix's ad-supported tier, Amy Reinhard, the company's new President of Advertising, announced that the plan now reaches 15 million global monthly active users.
"Our goal isn't just to offer the same products and tools the industry has come to expect—although we've made a lot of progress on that front over the last year," Reinhard wrote. "It's to build something bigger and better than what exists today." In the blog, the streamer's ad president also highlighted some of the service's accomplishments over its first year, including increasing ad formats to include 10-second, 20-second, and 60-second ads; expanding its advertiser categories to include dating, enhanced financial services and pharma; and enabling more targeting capabilities.
Additionally, Netflix recently announced Binge ads, which let viewers who are binging on a show watch an episode ad-free after a marketing message, will roll out globally in 2024. QR codes are also debuting in the ad creative on the streamer early next year. Netflix's sponsorship offerings are also off to a good start, according to Reinhard, with Frito Lay's Smartfood kicking things off by being the Title Sponsor of "Love is Blind." Additional sponsors are also on the way for "Squid Game: The Challenge" and the final season of "The Crown."
Moment Sponsorships, which feature cultural moments for advertisers to join in on, are also on the way at the end of this year in the U.S., rolling out globally in 2024. And on Nov. 14, T-Mobile, Nespresso, and other advertisers will present Live Sponsors for Netflix's live sports event, The Netflix Cup. After adding more measurement and third-party verification capabilities with partners such as Integral Ad Science and DoubleVerify, Nielsen One measurement in the U.S. and with EDO onboard to measure advertising impact, the company will bring its capabilities globally and" look to partner internationally with third-party providers to enable campaign verification in 2024" according to Reinhard.
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