Netflix’s priority for its new advertising business

Chris Pash
By Chris Pash | 25 January 2024

Giant streaming content player Netflix, building its advertising supported subscription base, wants to be a better partner to advertisers.

Growth in subscribers to the ad-supported tier is steep. The model grew 70% in the December quarter, 70% for the quarter before and then 100% the quarter before that. 

“That's a good trajectory to be on,” co-CEO Gregory Peters said when briefing analysts.

“Our top ads priority … is scale.”

Netflix now has 23 million monthly average users in the ad-supported tier, up from 15 million reported in November.

“It's fair to say that we've still got plenty of room to grow in all the markets that we operate in,” says Peters. 

“And we're focused on the additional work that we can do in that space. That means making the ads plan more attractive. We've added streams, higher resolution, downloads. It means engaging partner channels.”

A priority is growing the technical advertising features and go-to-market capabilities. 

“These are features like targeting, improved ad relevance,” he says.

“That's good for members. It's good for brands. We've got tonnes to do on improved measurement. We want to launch more ads products. We've got binge ad sponsorships now. 

“And we have to build increasingly the capability to be better partners with advertisers and serve their needs. 

“This is better sales teams, ad operations and just more capability to meet brands where they need us and how they need us. So we're focused on the long-term revenue potential here. We're very optimistic about it.

“It's a huge opportunity, $180 billion of ad spend ex-China and Russia, $25 billion alone on Connected TV. We know ad dollars follow engagement. We've got the most engaged audience. So we believe we're well positioned to capture some of that ad spend that shifts from linear to streaming.”

Overall Netflix has a record 260.8 million paid subscribers, up 13.1 million in the December quarter.

And Netflix forecasts "strong growth" in 2024. The ads plan now accounts for 40% of all Netflix sign-ups in markets where the option is available.

"We enter 2024 with good momentum," the company said, when releasing December quarter results.

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