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Netflix the cheaper, ad-supported tier has amassed 40 million monthly busy users worldwide, the company said Wednesday.
That’s almost double the 23 million figure the streaming giant reported in January.
The company also said it would launch its own advertising platform and stop collaborating with Microsoft on the technology. The tech giant will remain a programmatic advertising partner, but will also be joined by other ad tech companies including The Trade Desk, Google Display & Video 360 and Magnite.
Netflix will begin testing its ad technology platform in Canada later this year and plans to launch it in the U.S. by the end of the second quarter of next year. The company aims to launch the platform everywhere by the end of 2025.
The announcement was made Wednesday alongside a Netflix Upfront presentation aimed at attracting advertisers. The streaming giant has joined its media partners in annual initiatives to block ads on its platform for the second time.
On Wednesday, the company said it had reached an agreement to broadcast two National Football League games on Christmas Day this year and at least one game on the same day in 2025 and 2026.
Netflix has the option to host one or two games in future years, with 2024 being the test year, co-CEO Ted Sarandos told CNBC on Wednesday.
This is Netflix’s first real step into live sports after years of resistance. Sports, especially the NFL, have proven to be the glue that keeps established television intact and have also proven to be the boost for streaming services.
Terms of the deal with the NFL were not disclosed, but people familiar with the matter say Netflix will pay about $75 million per game. Spokespeople for the NFL and Netflix declined to comment.
The streamer will employ its own announcers for the games and will cooperate with existing production companies. Sarandos told CNBC that he thinks the NFL is the right choice because it fits the streamer’s event strategy, allowing Netflix to effectively run the day.
Streaming advertising market
Netflix first introduced its ad-supported subscription plan in November 2022 as part of a broader effort to boost revenue amid slowing subscriber growth. This strategy included last year’s restriction on password sharing.
Since then, Netflix has been growing its ad-supported customer base at a breakneck pace, even as it has been leisurely to join the ranks. As part of this effort, Netflix has gotten rid of its cheapest ad-free plan in the US and UK
The company said Wednesday that 40% of all sign-ups in countries where this level of advertising is available are for this cheaper plan. Netflix currently has 270 million subscribers.
By comparison, Disney’s flagship service, Disney+, has 117.6 million subscribers worldwide, while Warner Bros.’ streaming unit. Discovery, led by Max, has 99.6 million. The two companies recently announced that they will offer a streaming bundle to prevent subscribers from canceling their subscriptions and aid them enhance the profitability of their streaming business.
Meanwhile, fledgling competitors are adding subscribers quarterly but still lag behind. In the most recent quarter, Comcast’s Peacock had 34 million customers, while Paramount Global’s Paramount+ had 71 million.
Netflix’s monthly busy advertising numbers come just a month after Netflix told investors it would no longer provide quarterly subscriber updates. The company said at the time that it was generating significant profit and free cash flow and that membership numbers were not the only factor in the company’s growth. It was found that this metric lost its importance after it started offering multiple price points for membership.
Meanwhile, the linear TV audience continues to shrink and established media companies are trying to gain a foothold in streaming.
Legacy media companies have suffered in recent quarters as the advertising market has slumped amid fears of a recession and soaring interest rates. Companies typically pull back on advertising spending in times of economic uncertainty.
However, with a long runway ahead of it in the streaming industry, Netflix has established itself as a leader in this segment while many other companies struggle to make their streaming platforms profitable.
Disney executives recently referred to Netflix as the “gold standard” for streaming and noted that there has been additional supply in the advertising market due to a competitor that has recently entered the market, possibly referring to Netflix.
Media companies recently released quarterly results that showed the established TV advertising market remains supple, although improving. However, digital and streaming advertising is experiencing a renaissance.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.
