Netflix announces ad tier milestone and adtech platform

Netflix’s ad-supported tier has reached a new milestone.

At its first in-person upfront in New York City on Wednesday, the streamer announced that its ad tier now drives 40% of all signups in the 12 countries where it’s available and has 40 million global monthly active users.

Netflix’s ad tier, launched in November 2022, has grown swiftly in recent months. In January, Amy Reinhard, president of advertising at Netflix, told Variety that the $6.99-per-month subscription plan had more than 23 million monthly active users. Two months before that, it had 15 million. One year ago, it had five million.

In October, Netflix told shareholders that its ad tier drove 30% of all signups where it’s available. In Q1 2023, Netflix derived 18% of gross U.S. subscriber sign-ups from its ad tier, Antenna found in a report released on May 13.

Analysts expect Netflix to rely on its ad-supported plan to attract and keep new users. Netflix maintains a churn rate of around 2%, much lower than the weighted average of just over 5% between streaming services, according to Antenna.

Netflix took time out of its upfront presentation at Pier59 studios, where it's also hosting a two-day experience with rooms themed after popular series, to boast about how engaged its ad-supported users are—more than 70% watch Netflix for more than 10 hours per month, according to Nielsen. It also alleged that users pay more attention three hours into watching than when they first start, making them around twice as likely to respond to an ad compared to other streaming services and linear TV. 

Building the pipes

Netflix also announced that it's launching an in-house adtech platform that gives advertisers new ways to buy and measure. The internal offering will include measurement partnerships with Affinity Solutions, DoubleVerify, EDO Inc, Integral Ad Science, iSpotTV, Kantar, Lucid, NCSolutions, Nielsen and TVision.

Looking buy-side, Netflix said that it appointed The Trade Desk, Google's Display & Video 360 and Magnite as its main programmatic partners, alongside Microsoft.

In Asia Pacific, Netflix is likely to expand its programmatic offerings soon, according to Nick Seckold, the regional vice president for Asia Pacific at Microsoft Advertising in a recent interview with Campaign. Netflix currently only offers advertising in Australia, Japan and South Korea.

On the sports front, Netflix on Wednesday morning, prior to its presentation, revealed that it will air the NFL’s two Christmas Day marquee games this year and at least one in the next two years. It also said energy drink brand Celsius will sponsor the upcoming bout between Jake Paul and Mike Tyson streaming on the platform.

It also paid its upfront dues by debuting three sports series in partnership with the International Olympic Committee: the first focusing on gymnast Simone Biles, the second following potential gold medal contenders ahead of the upcoming summer games and qualifying events and the third tracking the world’s fastest runners.

Netflix finished the upfront dance by unveiling Adam Sandler’s return to Happy Gilmore 2 and a series renewal for 3 Body Problem.