On Tuesday, Netflix Inc (NASDAQ: NFLX) reached a significant milestone, announcing that its ad-supported streaming tier now serves 70 million monthly active users two years after its introduction.
The company unveiled the update during its latest report, showcasing strong momentum for this lower-priced plan, which has quickly become a popular option in markets where it is available.
More than 50% of Netflix's new sign-ups opt for the ad-supported tier, reflecting a growing trend among customers seeking affordable access to streaming content.
The service, launched in November 2022, was initially rolled out to combat slower subscriber growth but has since shown steady performance across all key regions, CNBC reports.
Despite early challenges, Netflix has overcome subscriber stagnation. In the third quarter, the company added 5.1 million new users, surpassing Wall Street's expectations and bringing its membership count to 282.7 million across various pricing plans.
Next year, Netflix will stop sharing subscriber figures and focus on revenue growth and other financial metrics as key performance indicators.
Netflix confirmed it has sold out its ad inventory for two live National Football League (NFL) games set to air on Christmas Day as part of a three-year deal announced earlier this year.
The streaming giant has secured significant advertisers, including FanDuel and Verizon Communications Inc (NYSE: VZ), with FanDuel set to become the exclusive pregame sportsbook partner. The move signals Netflix's strategic push into live sports broadcasting and ad-supported content.
Since May, Netflix has made significant progress with its ad-supported tier, nearly doubling its user count from 40 million reported during Upfronts earlier this year.
The platform, which initially relied on Microsoft Corp (NASDAQ: MSFT) for ad tech, has launched its advertising infrastructure in Canada, with plans for a U.S. rollout by mid-2025.
Analysts are upbeat about Netflix's outlook for 2025, citing strong quarterly results and multiple growth opportunities.
Bank of America praised Netflix's focus on expanding ads, gaming, and live events, highlighting its scale as a key strength.
Macquarie sees popular releases like Squid Game 2 and NFL Christmas broadcasts boosting engagement but flagged concerns over ad-tier monetization, particularly in international markets.
KeyBanc projects strong revenue growth from ad-supported options and potential price increases, while JPMorgan sees Netflix as well-positioned to dominate TV and movie streaming.
Netflix stock surged over 73% year-to-date. Investors can gain exposure to the streaming giant through Invesco QQQ Trust, Series 1 (NASDAQ: QQQ), and SPDR S&P 500 (NYSE: SPY).
Price Action: NFLX stock is up 1.35% at $816.32 at the last check on Tuesday.