Netflix Plans for Future Growth Include a Focus on Advertising

Netflix, which turns 26 years old this year, is looking to advertising, live events and password sharing crackdowns to power its next growth phase. The company’s 232.5 million global subscriber base makes it the world’s No. 1 paid streaming platform, a position it wants to hold, and expand, as it shifts into an era of new management under co-CEOs Ted Sarandos and Greg Peters. At a virtual presentation at Netflix’s first Upfront Wednesday, Sarandos admitted that “we have a long way to go to build scale in advertising,” but said the company intends to focus on improving that share.

“As it made its first major presentation to Madison Avenue,” Netflix “remained among the companies with the smallest pool of customers paying for an ad-supported version of its service,” The Wall Street Journal reported from the company’s Upfront event.

According to WSJ, “Netflix’s $6.99-a-month ad tier had 937,616 U.S. subscribers in March, while Disney+’s ad-backed plan — which debuted a few weeks after Netflix’s November debut — had 863,791, according to subscription-analytics firm Antenna.”

When it comes to ad dollars, Netflix is competing against platforms that have been plying that trade far longer. Among them, Disney-controlled Hulu, which claimed 20 million U.S. ad-tier subscribers in March, and NBCUniversal’s Peacock, with 15.5 million ad-tier subs during that period.

When it comes to commercials, Netflix trails even Paramount+ Essentials (10.7 million) and Warner Bros. Discovery’s Max with ads (3.6 million), per Antenna. But Netflix touted Nielsen data saying its 2022 engagement was “three times greater than all our competitors combined.”

Netflix said that when taking into account all household members who watch the company’s ad-tier service using different profiles it has a global monthly ad-tier base of almost five million. While the total number of paid ad-tier subscriptions wasn’t disclosed, Netflix “said the number had more than doubled since earlier in the year,” reports WSJ.

“Simply put, Netflix is at an inflection point,” suggests Variety, explaining the platform’s “two overarching issues that will be key to the company’s growth in the short term” are growing ad revenue and generating more subscription dollars by cracking down on password sharing.

In a lengthy analysis of the company’s forward-looking strategies, Variety writes that “the streamer is experimenting with hosting live events, such as Chris Rock’s big return to stand-up, and, starting next year, the annual SAG Awards,” and notes “Netflix is also pursuing ancillary arenas such as licensing, merchandising and offering paid IRL experiences like those based on ‘Squid Game’ and ‘Bridgerton.’”

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