When Netflix began launching its ad-supported plan in November 2022, the company was uncertain on whether it would be a wise strategy. The streaming giant was entering a realm it had previously avoided. Just a year earlier, the company had said, “When you read speculation that we are moving into selling advertising, be confident that this is false,” emphasizing that staying ad-free was central to its identity.
Two years later, it seems that Netflix made the right decision. The company’s ad tier now boasts 70 million monthly active users worldwide. This growth has been consistent over time, and interestingly, more than 50% of new Netflix subscribers in countries where the ad plan is available are choosing this option.
Netflix’s Ad Tier Proves Successful
Netflix’s advertising strategy has become a crucial part of its business model. The ad-supported plan started with 22 million monthly active users in January 2024 and surged to 40 million users by May. In a statement released on Tuesday, Amy Reinhard, Netflix’s president of advertising, said, “We’re excited to… continue to see steady progress across all countries’ member bases.”
The shift toward advertising has enabled Netflix to offer a more affordable subscription option. The Standard plan with ads provides 1080p quality, allows downloads on up to two devices, and permits simultaneous playback on those same devices for $6.99 in the U.S. For their part, advertisers benefit from access to a measurement system that assesses the performance of their advertising campaigns.
This is how ads look on Netflix.
In April 2022, Netflix considered launching an ad-supported plan after experiencing its first subscriber decline in a decade. At that time, the streaming landscape was quite different. Hulu and HBO Max had already embraced advertising, while Disney+ was preparing to follow suit. Now, ad tiers have become a standard offering across most streaming platforms.
Netflix has now moved beyond that challenging period. The number of subscribers has consistently grown in recent years, even as subscription prices have increased. The company added 5.1 million subscribers in the last quarter, bringing its total to an impressive 282.72 million. Additionally, Netflix surpassed analysts’ expectations and reported a net profit of $2.4 billion.
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