The ad-supported Netflix (NFLX) category is starting to show some signs of life – six months after it debuted.
In the company’s virtual presentation on Wednesday, the streaming company revealed its ad-driven plan, dubbed “Basic with Ads,” has 5 million global monthly active users, or MUAs, a metric that “is really important[s] for advertisers.”
The company has yet to disclose actual subscriber numbers for the ad tier, or how much revenue has been generated so far. An MUA can include multiple people using the same account.
“We will interpret that 5 million MAU indicates 2-3 million subscription accounts,” Mark Mahaney, an analyst at Evercore ISI, wrote in a new note to clients Thursday, adding that management reiterated its long-term goal of generating $3 billion, or 10% of revenue. its revenue. from publicity.
Mahaney estimates that estimated ad revenue likely won’t be 10% of all revenue until “maybe 2025.”
“The most important question for us is how likely advertising-supported subscriptions are to drive Netflix subscriber growth, and we continue to believe — based on our extensive survey work on price sensitivity of NFLX users — that these subscribers are likely to be predominantly incremental.”
Netflix is still grappling with an ongoing writers’ strike, which could affect content spending and upcoming releases, though the company said it had enough content banked to get through the shutdown. The platform also faces an ongoing backlash surrounding its password-sharing crackdown. It previously said the crackdown would hit the US sometime this quarter.
Shares of Netflix opened higher Thursday after the presentation, up more than 5% in early morning trade.
‘The signs are promising’
Netflix currently has 232.5 million subscribers globally, but the company said ad-dependent users have doubled since early 2023, with more than a quarter of Netflix subscribers now choosing the ads plan in countries where it’s available.
The ad layer complements the existing ad-free offerings on Netflix, currently available in 12 countries, including the US, UK, Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico and Spain. It costs $6.99 per month in the United States.
“The signs are promising: participation in our advertising plan is similar to our similar non-ad plans. This is critical because it all starts and ends with consumers,” Netflix co-CEO Greg Peters said during Wednesday’s presentation.
Netflix and ad buyers “share a common goal, which is to build connection,” Peters added, explaining, “You want to connect consumers to your amazing brands. And we want to connect them to amazing entertainment that they’ll love.”
The company revealed that more than 70% of Netflix advertising plan members are between the ages of 18 and 49, with a global average age of 34.
Netflix co-CEO Ted Sarandos described the company’s content slate with upcoming seasons of “The Crown,” “Sex Education,” and “Virgin River” on deck, along with new shows like Sofia Vergara’s “Griselda” and “All the Light.” For Shawn Levy. We can’t see.”
“Netflix shows and movies generate global audiences many times larger than our closest competitor,” he said.
Alexandra Channel He is a senior correspondent at Yahoo Finance. Follow her on Twitter @tweetAnd linkedin, and email it to [email protected]
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