Netflix has announced another quarter of growth in its advertising segment, although it is still in its early stages. However, the advertising segment is growing so rapidly that the company plans to soon phase out the cheapest option without ads. In its financial report for the fourth quarter of 2023, the streaming giant reported that advertising segment subscribers accounted for 40% of new subscribers in countries where ads are available. This is an increase from 30% in the third quarter. Netflix also saw a 70% increase in the number of subscribers using the advertising segment compared to Q3, similar to the previous report.
Vice President Reed Hastings, in a discussion about the financial results, said that the advertising segment has 23 million active monthly users in 12 countries where these plans are available and expects further growth in this number. Although he acknowledges that it will take many years for ads to have a “material impact on our overall business,” he is pleased with the current development of this segment.
“All markets are different – there is no magic number of active monthly users,” Hastings said. “But it can confidently be said that in all the markets where we operate, there is still plenty of room for growth.”
Hastings also noted that promotional packages, such as the T-Mobile offer “Netflix on Us,” may contribute to an increase in the number of subscribers. The free promotion transitions to the advertising segment after a certain period, and the lower price of this segment may better suit both Netflix and its partners.
Along with the growth of the advertising segment, the company reiterated its plans to gradually phase out the Basic membership over the coming months. The plan will be suspended for all subscribers in Canada and the UK in the spring “and we’ll see what’s next,” as stated in the shareholder letter. (Netflix stopped offering the Basic plan to new subscribers at the end of last year).
The advertising team at Netflix, led by Amy Reinhard, will have a significantly expanded offering in 2025 when the company becomes the home of the flagship WWE program – Monday Night Raw. This is Netflix’s biggest commitment to live programming to date and will include 52 weeks of live shows annually.
In the shareholder letter, Netflix leaders also announced possible price increases. “As we invest in the development and improvement of Netflix, we will occasionally ask our members for small price increases to reflect these improvements, which in turn contributes to a positive investment cycle and further development of our service,” the letter stated.
Key questions based on the article:
1. How is the advertising segment growing at Netflix?
2. What are the company’s plans regarding phasing out the cheapest option without ads?
3. How large is the number of subscribers using the advertising segment?
4. How does Netflix plan to increase the number of subscribers?
5. When does the company plan to phase out the Basic membership?
6. How does Netflix plan to expand its advertising segment in the future?
7. Can price increases for subscriptions be expected at Netflix?
Definitions of important terms and jargon used in the article:
1. Advertising segment – a part of Netflix’s offering that includes ads, currently available in select countries.
2. Subscribers – individuals who pay a monthly fee for a Netflix subscription.
3. Advertising team – the team responsible for managing and developing the advertising segment at Netflix.
4. Financial report – a document presenting the financial data and results of a given company.
5. Streaming giant – a term used to describe Netflix as a large and popular streaming platform.
6. Active monthly users – the number of people using a service within a month.
7. Promotional packages – special offers that include discounts or additional benefits for subscribers.
8. Basic membership – the cheapest subscription option that does not include ads.
Suggested related links:
1. Netflix – Official Website
2. WWE – Official Website
The source of the article is from the blog windowsvistamagazine.es