Netflix Stock Rises 9% On The Strength Of Ad-Tier Growth

Following the release of information regarding its new ad-supported tier that indicated the business strategy is beginning to pay off, Netflix’s shares increased by more than 9% on Thursday.

This week, the streaming service reported that its less expensive, ad-supported tier had five million active monthly users, and that 25% of new members were choosing that price in regions where it is offered.

The announcement was made at Netflix’s first-ever pitch to advertisers on Wednesday, which marked the company’s participation in the industry’s so-called Upfront presentations. At their presentations this year, leading media firms like Warner Bros. Discovery and NBCUniversal, a division of Comcast, touted ad-supported streaming possibilities.

Late in 2022, Netflix introduced its ad-based service, which came after several quarters of stagnant subscriber growth and caused its stock to crash.

In its most recent quarter, the company reported mixed financial results, but claimed to have recruited 1.75 million users. Another step Netflix is doing to increase its revenue is preparing for the wider implementation of its password-sharing ban.

Media corporations have shifted their attention away from focusing on adding subscribers to their nascent streaming services and toward making the businesses viable. Some people have relied on advertising models and cut back on content spending to achieve this.

When Disney released its earnings last week, CEO Bob Iger highlighted that the company saw the Disney+ streaming service’s ad-supported option as an additional means of assisting the streaming industry in becoming profitable. During the quarter, Disney+ lost four million subscribers.

Netflix’s $6.99/month ad tier, which includes 15- or 30-second adverts before and during shows, represents a turnabout for the company’s management, which had previously stated that it would not allow advertisements on the platform.

The ad option was introduced by Netflix in collaboration with Microsoft. Later this year, Nielsen will score its content to assist advertisers better understand its reach.

Reed Hastings, the former CEO of Netflix, acknowledged shortly after the platform’s debut that he took some time to warm up to the idea of advertising. The price of Netflix’s ad-supported tier when it first debuted in November was $1 less than that of Disney+ and Hulu.

In order to attract more users, Netflix Co-CEO Ted Sarandos has stated that the firm is likely to offer a variety of subscription options with advertisements in the future.

Netflix Stock Rises 9% On The Strength Of Ad-Tier Growth

Following the release of information regarding its new ad-supported tier that indicated the business strategy is beginning to pay off, Netflix’s shares increased by more than 9% on Thursday.

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