Netflix’s stock price increased by more than 9%. Soon after revealing information on its new ad-supported tier on Thursday that seemed to indicate the business strategy is beginning to pay off.
This week, the streaming service said that its less expensive, ad-supported tier had five million active monthly users, and that 25% of new members were choosing that price in regions where it is offered.
The announcement was made at Netflix’s first-ever pitch to advertisers on Wednesday, which marked the company’s participation in the industry’s so-called Upfront presentations. At their presentations this year, leading media firms like Warner Bros. Discovery and NBCUniversal, a division of Comcast, touted ad-supported streaming possibilities.
Late in 2022, Netflix introduced its ad-based service, which came after several quarters of stagnant subscriber growth and caused its stock to crash.
In its most recent quarter, the firm reported mixed financial results, but claimed to have recruited 1.75 million users. Another step Netflix is doing to increase its income is preparing for the wider implementation of its password-sharing ban.
Media corporations have shifted their attention away from focusing on adding subscribers to their nascent streaming services and toward making the businesses viable. Some people have relied on advertising models and cut back on content investment to achieve this.
Netflix’s $6.99/month ad tier, which includes 15- or 30-second adverts before and during shows, represents a turnabout for the company’s management, which had previously stated that it would not allow advertisements on the site.
The ad option was introduced by Netflix in collaboration with Microsoft. Later this year, Nielsen is going to rate its content to assist advertisers better understand its reach.
In order to attract more users, Netflix Co-CEO Ted Sarandos has stated that the firm is likely to offer a variety of subscription options with advertisements in the future.