- Netflix stock rose Thursday after being shown to advertisers this week.
- The streaming service said it had 5 million monthly active users for its cheaper ad-supported option and that 25% of its new subscribers were subscribing to the latest tier.
- Netflix introduced a cheaper ad-supported option late last year after subscriber growth stagnated.
Soba photos | Light Rocket | Getty Images
Netflix saw its stock jump nearly 10% on Thursday shortly after revealing details about a new ad-supported tier that suggested the business model was starting to bear fruit.
The streaming service said this week that it had 5 million monthly active users of its cheaper ad-supported option and that 25% of its new subscribers were subscribing to the tier in regions where it’s available.
The update came at Netflix’s inaugural presentation to advertisers on Wednesday, marking the first time Netflix has participated in so-called industry pitches. This year, major media companies, including Comcast’s NBCUniversal and Warner Bros. Discovery, ad-supported streaming options in its presentations.
see chart…
Netflix stock rose on Thursday, shortly after the company provided new details about its ad support streaming category.
Netflix launched its ad-based option in late 2022, after a quarter of stagnant subscriber growth sent its shares down.
The company reported mixed financial results last quarter, but said it added 1.75 million subscribers. Netflix is also preparing to launch a wider password sharing campaign, which is another step to increase its revenue.
Media companies, previously focused on subscriber add-ons for fledgling streaming services, are now focusing their attention on making the business profitable. To do this, some have cut costs on content spending as well as relying on advertising models.
Last week, when Disney reported its earnings, CEO Bob Iger indicated that the company looked at the ad-supported option of its Disney+ streaming service as another way to help its streaming business reach profitability. Disney+ lost 4 million subscribers during the quarter.
Netflix’s ad tier, which costs $6.99 per month and features 15- or 30-second commercials before and during content, is a reflection of the company’s management, which has long said it will not place ads on the platform.
Netflix launched Advertising Option in partnership with Microsoft. Its content will be rated by Nielsen later this year to help advertisers better understand its reach.
Shortly after the launch, Netflix founder and former CEO Reed Hastings admitted that he had been slow to advertise on the platform. When Netflix launched the ad tier in November, it was a dollar cheaper than the ad-supported Disney+ and Hulu options.
Netflix CEO Ted Sarandos said the company will likely offer multiple subscription plans with ads in the future, highlighting the potential to add more subscribers.
— CNBC’s Alex Sherman contributed to this report.
“Reader. Infuriatingly humble coffee enthusiast. Future teen idol. Tv nerd. Explorer. Organizer. Twitter aficionado. Evil music fanatic.”