Netflix’s ad-supported tier has seen tremendous growth, with 40 million global monthly active users, nearly double the figure reported earlier this year. To further capitalize on this success, Netflix announced plans to launch its own advertising platform and end its partnership with Microsoft. The company will collaborate with other ad tech companies such as The Trade Desk, Google Display & Video 360, and Magnite. Testing of the ad tech platform will begin in Canada later this year, with a planned U.S. launch by the end of the second quarter next year, aiming for a global rollout by 2025.
These announcements were made during Netflix’s Upfront presentation, where the streaming giant aimed to attract advertisers. Additionally, Netflix made a significant move into live sports by securing the rights to stream two National Football League (NFL) games on Christmas Day this year, with plans for future matchups in 2025 and 2026. Co-CEO Ted Sarandos expressed his excitement about this partnership, highlighting how it aligns with Netflix’s event strategy and allows them to “own the day.”
The NFL deal marks Netflix’s first venture into live sports, an area that has proven to be a crucial component for traditional TV and streaming services alike. Although financial details were not disclosed, sources familiar with the matter suggest that Netflix will pay around $75 million per game. Netflix will hire its own announcers for the games while partnering with existing production companies.
In terms of its ad-supported subscription plan, Netflix introduced it in November 2022 to drive revenue amid slowing subscriber growth. Since then, the company has been aggressively expanding its ad-supported customer base. As part of this effort, Netflix eliminated its cheapest commercial-free plan in the U.S. and U.K. The company revealed that 40% of signups in countries with the ad tier available are opting for the cheaper plan. Currently, Netflix has a total of 270 million subscribers, while Disney+ and Warner Bros. Discovery’s streaming unit, Max, have 117.6 million and 99.6 million global subscribers respectively. To combat competition, Disney and Warner Bros. Discovery recently announced a streaming bundle to retain subscribers and make their streaming businesses profitable.
While competitors like Comcast’s Peacock and Paramount Global’s Paramount+ are gaining customers, they still lag behind Netflix in terms of subscriber numbers. Netflix’s decision to stop providing quarterly subscriber updates reflects the company’s belief that membership numbers alone do not define its growth. The company has seen substantial profit and free cash flow and now offers multiple price points for memberships, making the metric less significant.
As linear TV audiences continue to decline, traditional media companies are striving to establish a presence in the streaming space. However, Netflix remains the leader in this segment, while legacy media companies face challenges in making their streaming platforms profitable. Disney executives even referred to Netflix as the “gold standard” of streaming. Although the advertising market for traditional TV remains soft, digital and streaming advertising has shown signs of recovery.
In conclusion, Netflix’s ad-supported tier has experienced remarkable growth, prompting the company to launch its own advertising platform. The streaming giant’s entry into live sports with NFL game rights further solidifies its position as a dominant player in the industry. While traditional media companies struggle to make their streaming platforms profitable, Netflix continues to lead the way and set the standard for streaming services.
