Netflix's Ad-Supported Tier Hits 70 Million Monthly Users, Two Years After Launch

Netflix’s Ad-Supported Tier Hits 70 Million Monthly Users, Two Years After Launch

Two years after launching its more affordable, ad-supported streaming option, Netflix has reached a major milestone: 70 million monthly active users. The tier, introduced in November 2022, was part of the company’s efforts to address a slowdown in subscriber growth. As of today, the ad-supported plan has not only become a viable alternative for budget-conscious users but is also helping Netflix maintain growth momentum globally.

According to Netflix, more than 50% of new sign-ups in regions where the ad-supported plan is available are choosing this lower-cost option. The streaming giant’s quarterly report highlights that the ad-supported tier continues to show steady progress, contributing significantly to the company’s global user base, which now totals 282.7 million memberships across all pricing tiers.

A Strong Start: Netflix's Ad-Supported Plan

Launched amid challenges in subscriber growth, Netflix’s ad-supported option has resonated with users. By offering a lower subscription price in exchange for ads, Netflix positioned itself as a more affordable option in an increasingly competitive streaming market. The introduction of this model has proven to be a smart business move, with Netflix showing continued growth in both its user base and revenue streams.

Subscriber Growth Outpaces Expectations

Netflix’s latest earnings report for Q3 2024 revealed that it added 5.1 million new subscribers, surpassing Wall Street estimates. With this growth, Netflix appears to have overcome previous hurdles, including a saturation of markets in key regions. In fact, more than half of the new sign-ups in markets offering the ad-supported tier opted for the cheaper plan, signaling strong consumer interest in affordable options with advertising.

Focus on Revenue Growth, Not Just Subscriber Numbers

Starting next year, Netflix will shift its focus away from tracking subscriber numbers and instead emphasize revenue and other financial metrics to measure its performance. This move reflects the company’s growing emphasis on monetization strategies and profitability rather than merely expanding its subscriber count.

NFL Deal and New Advertisers Boost Ad Revenue

Netflix’s push into ad-supported streaming has been further strengthened by partnerships with major brands. In a significant move, Netflix secured a deal to air two National Football League (NFL) games on Christmas Day 2024. The deal includes a three-year partnership, and Netflix confirmed that its ad inventory for these live games has already sold out.

FanDuel, the sportsbook platform, and Verizon have signed on as advertisers for the games. As part of the deal, FanDuel will serve as the exclusive pregame sportsbook betting partner for Netflix, while also sponsoring in-show content, expanding the company’s footprint in the live sports streaming market.

The Bigger Picture: How Streaming Is Evolving

Netflix isn’t the only streaming service embracing an ad-supported model. As competition in the streaming industry heats up, more media companies are looking to ad-backed strategies to offer affordable subscription plans to users while also tapping into lucrative ad revenues. Despite challenges in the traditional TV ad market, the digital and streaming ad landscape continues to grow, making ad-supported tiers a crucial component of streaming services' financial success.

Netflix’s New Ad Platform and Global Expansion

Netflix has also made moves to strengthen its ad-tech capabilities. After announcing in May that it would launch its own advertising platform, Netflix ended its partnership with Microsoft for ad technology. The company has already begun rolling out the platform in Canada and plans to expand it to the U.S. by mid-2025, with a global launch set for the end of 2025.