Initially, Netflix was opposed to the idea of displaying advertisements to reduce the price of its subscription and attract more subscribers. But the group eventually changed their minds. And two years ago, it displayed its first advertisements on a new, cheaper subscription partially financed by advertisers. Today, the company regrets nothing, since advertising is now one of the pillars of its business model.
In an announcement published on its site, Netflix indicates that the ad-supported subscription now has more than 70 million monthly active users. And this offer is particularly popular among new subscribers. Indeed, in countries where the offer with advertising is available, it has a share of more than 50% on new subscriptions. “As we celebrate two years since the launch of Netflix’s advertising business, we continue to see positive momentum and growth across all areas of the business,” reads the announcement, posted by Amy Reinhard , president of advertising at Netflix.
Netflix’s ad-supported subscription growth is very impressive. Indeed, as The Hollywood Reporter recalls, it only had 15 million users a year ago, and 40 million users six months ago.
The offer also appeals to advertisers
Obviously, for this subscription to be profitable, it must also attract advertisers. And on this side, Netflix is also a hit. In December, the platform will broadcast two NFL (American football league) matches. And today, all advertising inventory for these events is already sold. In addition, the platform has also signed special partnerships with brands for the release of the new season of Squid Game.
The platform is also making huge strides in measuring the effectiveness of its ads for advertisers. And on the technological side, it is moving towards using its own advertising technology, instead of relying on the services of third-party companies. Canada is the first country where Netflix ads rely solely on its own advertising technologies. And in 2025, this will be the case for all countries where the company offers its subscription with advertising. According to it, its new offer gives more flexibility to advertisers.
Netflix on the cusp of a major change
Netflix discusses the success of its ad-supported subscription as it prepares to radically change the way its performance is measured. Traditionally, investors judge Netflix’s performance by analyzing financial results and subscriber growth.
But next year, SVOD will no longer systematically declare its number of subscribers. For what ? Netflix’s business model has evolved, and the number of subscribers is no longer a relevant indicator for evaluating its performance.
- Two years ago, Netflix launched its cheaper subscription, but with advertisements
- Today, this subscription has more than 70 million users
- In addition, the platform is increasingly attracting advertisers
- And it is preparing to use its advertising technologies exclusively
