Netflix's Ad-Supported Users Reach 70 Million, Nearly Doubling Since May, Boosting Future Growth
1min read Netflix's ad-supported subscription tier has reached 70 million global monthly active users, just two years after its launch in November 2022.
The company announced on Tuesday that more than 50% of its new sign-ups in countries offering the ad-supported option are choosing this cheaper plan. This marks significant growth from the 40 million active users reported in May this year.
The introduction of the ad-supported tier was in response to a slowdown in subscriber growth, but recent trends show that subscriber growth is no longer an issue. In the third quarter, Netflix added 5.1 million subscribers, bringing the total to approximately 283 million memberships across all pricing tiers. This surge in subscribers has exceeded Wall Street estimates.
Netflix's strategy to diversify its content and revenue streams has included increasing its streams of live events, such as two National Football League (NFL) games scheduled for Christmas Day this year. The company has already sold out its ad inventory for these games, with sponsors like FanDuel and Verizon. FanDuel will be the exclusive pregame sportsbook betting partner and will feature a sponsored in-show segment.
In addition to live sports, Netflix has been promoting games on its platform and cracking down on password sharing to boost revenue. The ad-supported tier, priced at $6.99 per month in the U.S., offers a more affordable option compared to ad-free plans that start at $15.49 per month. Initially powered by Microsoft's technology, Netflix is transitioning to its own in-house ad technology to function independently from third parties.
The company has seen continuous momentum and growth across all areas of the business. Amy Reinhard, president of advertising at Netflix, expressed optimism about the future, stating, "There has been continuous momentum over the last two years, but we're just getting started and can't wait to see what's to come."
Netflix's broader push to diversify its offerings and increase revenue includes plans to launch its own advertising platform by the end of the second quarter next year in the U.S., with a global rollout expected by the end of 2025. While advertising is not anticipated to become a primary growth driver until 2026, the current growth in the ad-supported plan demonstrates the potential for significant future revenue.
Beginning next year, Netflix will shift its focus from subscriber numbers to revenue and other financial metrics as performance indicators, reflecting its evolving business strategy.