Netflix’s advertising category reaches 5 million users globally six months after its launch; The company tells Virtual Audiences in its first introduction that a quarter of new subscribers choose the advertising plan

Six months after the ad-supported subscription tier’s historic debut, Netflix said the plan has reached 5 million monthly active users globally.

The number, along with stats, insights, product announcements, and other programming, was revealed during the company’s pitch to advertisers. The LA-shot event, which was pre-recorded, was held almost partially due to concerns about the WGA strike and doubts about talent. Co-CEO Greg Peters opened by acknowledging that the remote setup was a diversion from a previously planned in-person meeting at New York’s Paris Theater, though he didn’t mention the labor struggle. He said, “It’s not quite as we originally planned it, but we live in a dynamic world and we certainly found being able to adapt to a new reality very beneficial.”

The MAU number is different for paid subscribers and can be calculated differently by different companies depending on how they define what it means to be “active”. Although the MAU number is a fraction of Netflix’s global subscriber base of 232.5 million, the company said the number of customers paying for its $7 per month advertising plan has doubled since early 2023.

More than a quarter of our subscribers now choose the ads plan in countries where it’s available. At launch, it was in 12 countries: Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the United Kingdom, and the United States. Seventy percent of our ad-supported members are between the ages of 18 and 49 and the average age of our ad-supported subscribers is 34.

“The signs are promising: participation in our advertising plan is similar to our comparable non-ad plans,” said Co-CEO Greg Peters. “This is critical because it all starts and ends with consumers.” There’s “a lot of stands ahead of us,” the CEO added, noting that Netflix accounts for 10% of all TV usage even in the most penetrating regions.

Co-CEO Ted Sarandos said the company’s scale makes the advertising effort viable. “Our shows and films generate global audiences many times larger than our closest competitors,” he said. Sarandos also offered context for the company’s longstanding resistance to allowing the ads. “For years, we’ve been trying to keep our business as simple as possible, so we can grow as fast as we can,” he said. “But we already realized that we left a big part of it on the table.”

Sarandos added that the innovations made at the request of Earthquake’s binge release House of Cards will help ultimately keep this day on Netflix, even if it takes several years to pull off. He harkens back to his home entertainment days, referencing the VHS release of The best in 1986, which featured an advertisement for the complete nutritional diet Pepsi. “This has never happened before, advertising kicked ass!” Sarandos agitated. “It was like an extension of the movie, and people loved that.” Before long, similar branding campaigns were woven into releases like Jurassic Park Branded content was on its way. “What was once thought of as entertainment’s most exclusive real estate,” he said, has become a creative advertising sandbox. “We will bring the same level of creativity to advertising on Netflix.”

With the wealth of data Netflix has, Sarandos theorized, a 30-minute commercial could be created, playing over several days in short bursts as viewers start and stop watching. “You can’t do that on linear TV because people don’t live on one channel. Now, it’s not going to happen next week, maybe even next year. And it’s just one idea. We can’t wait to explore your other ideas and opportunities.”

The event presented marks a milestone for Netflix about six months after it rolled out an ad-supported $7 per month subscription plan after insisting for years that it would never accept ads. After collaborating with Microsoft on a hastily publicized effort, the company quickly expanded its advertising team led by Snap Inc. veteran Jeremy Gorman. and Amazon. Another seasoned exec to join the fold is Peter Naylor, who led ad sales at Hulu, and whose Netflix co-founder Reed Hastings cited his appeal to streaming advertising as an inspiration to get in on the game.

Wall Street analysts predicted that the introduction of advertising could bring in billions in new revenue for Netflix as it maneuvers through a period of subscriber outrun in North America. Netflix is ​​still the top streamer by a fairly wide margin, but it faces stiff competition both at home and around the world. Disney introduced an ad-supported version of its flagship service, Disney+, last December. The most recent quarterly reports from Disney and Netflix revealed little in terms of early gains in advertising, though executives emphasized that they remain optimistic about the opportunity.

Gorman told buyers during her segment of the show that she felt like she had a “promotion” from a big Netflix fan to global advertising director when she joined the company last year. Just six months passed between the initial announcement of the ad-streaming plan and the launch of the ad-supported tier, she said, and just another six months since launch. “It’s been a little busy in here,” she said. “But we’ve been incredibly thoughtful about how we engage members in the ad experience.”