Netflix Inc. announced a sharp increase in demand for its streaming-with-ads plan on Wednesday. The company is making this move in an effort to outpace the industry, which is attempting to balance rising online consumption with enticing viewers and advertisers away from cable TV.
During TV’s upfronts—an industry tradition where network and media executives try to court advertisers—the streaming platform made the announcement. The increase, according to some analysts on Wednesday, suggested Netflix NFLX, -0.02% was growing too big to be passed over by larger companies.
Netflix reported that 40 million people worldwide now actively use its less expensive plan, which shows ads during movies and television shows. From 5 million a year ago and 23 million in January, that is a significant increase. The standard, ad-free Netflix tier costs $15.49 per month, while the ad-supported tier costs $6.99.
By year’s end, Evercore ISI analysts predicted that Netflix’s advertising strategy was “clearly on a path” to surpass 50 million active viewers. They claimed that this indicated “real scale” for the platform.
“And considering Netflix’s already very high frequency, dependable brand, and global reach, based on our discussions with advertisers over the last year, it’s when Netflix crosses the 50MM threshold that it becomes a key part (almost a must-buy) of brand advertisers’ marketing budgets,” they said.
Netflix announced that it will introduce an internal advertising technology platform by the end of the following year, coinciding with that jump. Bringing its advertising technology in-house, according to Netflix, will give marketers new options for purchasing ads and ways to assess their efficacy.
Additionally, the company announced that starting this summer, it will add The Trade Desk, Google’s Display & Video 360, and Magnite to its list of platforms it will be able to purchase. According to Netflix, these businesses will join Microsoft Corp. MSFT, +1.75% as the primary programmatic partners for advertisers.
In 2022, Netflix declared that Microsoft has been selected as a partner to help expand the streaming service’s ad-supported plans.
According to the company, more than 70% of Netflix’s ad-supported subscribers watch more than 10 hours per month. In April of last year, Netflix revealed that it had 270 million subscribers worldwide.
Additionally, Netflix announced that it will broadcast two NFL games on Christmas Day for the first time, in response to the growing demand from streaming services for more live sports coverage, which is essential to the cable TV industry. The network announced that in 2025 and 2026, it would air at least one Christmas game. The coverage may boost the streaming platform’s viewership and revenue.
According to BMO analysts, the pursuit of NFL broadcasts “suggests that live sports will be a key tenant to the overall strategy in the coming years… and should prove incremental to overall engagement,” they said on Wednesday.
On Wednesday, Netflix’s stock experienced a slight decrease. The last twelve months have seen an 83.8% increase in the stock price.
