Yahoo Finance Netflix Ad Tier Hits 15M Monthly Active Users
In the year since advertising began running on Netflix, the company said it has reached 15 million monthly active users on its ad-supported subscription tier.
That’s up from the 5 million MAUs announced last May and follows the company’s assertion in last month’s earnings report that the Basic With Ads tier grew 70% in the third quarter. The MAU metric, while common in the streaming ad sector, is not the same as paid subscribers. Netflix has not yet broken out how many of its 247 million global subscribers are on the entry-level ad tier, which launched in 12 countries before expanding globally.
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Amy Reinhard, who was promoted last month to President of Advertising, reflected on the milestone in a blog post marking the anniversary. “We have built an incredible foundation, focusing on areas advertisers told us matter most,” she wrote. “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. It’s to build something bigger and better than what exists today.”
The introduction of advertising in 2022 was a stunning development for the streaming giant, which had spent years insisting it would never run ads. After posting consecutive quarterly declines and seeing one-third of its market value suddenly evaporate, Netflix decided to reverse course, announcing it had teamed with Microsoft to roll out ads.
The move was replicated by Disney+ and a consensus formed in the industry that advertising will need to play a significant role in streaming in order for its economic model to prove viable. For Netflix, the ad launch was paired with an initiative to start charging customers to share passwords, something that had been tacitly permitted for free. Instead of paying the new fee to share their passwords, evidence suggests that many subscribers simply enrolled in the ad-supported plan. The dual-pronged strategy has thus far worked out well for Netflix, which has returned to its customary quarterly subscriber growth while also reporting increased free cash flow and profits.
Reinhard used the blog post to recap a number of product announcements of late, including a “binge ad” unit, which will become available in the first quarter of 2024. The ad enables viewers who are watching multiple episodes of a series in a row to get the fourth episode ad-free.
Title sponsorships have been another new opportunity, Reinhard noted. Frito-Lay recently came in as a sponsor of Love Is Blind, with its logos incorporated into the title card of the series. Similar activations are in store for Squid Game: The Challenge, and the upcoming final season of The Crown. On November 14, T-Mobile, Nespresso, and others will be the presenting live sponsors for The Netflix Cup, a golf competition that will be the company’s first foray into live sports.
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