June 7, 2024
It looks like Netflix has solved the problem of securing long-term growth. The streaming giant now has 40 million users on its ad-supported streaming service. That number has almost doubled in the last four months, which is really significant.
Netflix's announcement shows strong growth for its ad-supported packages, from five million users a year ago to 23 million in January. The ad-supported package costs $6.99 per month, compared to $15.49 for Netflix's standard ad-free packages.
The disclosure of the figures is significant, especially as Netflix said in its March quarter results that it planned to stop providing quarterly membership data and average revenue per member. This created some uncertainty, as the move could mean the company was expecting subscriber growth to slow, and revealing that fact to the market could be uncomfortable for them. Netflix reported users for the ad-supported tier rather than total subscribers.
Analysts at J.P. Morgan estimate that Netflix probably has around 19 million subscribers to its ad-supported packages, which they expect to grow to 28 million by the end of the year. The goal is to reach 39 million by the end of 2025.
The streaming platform announced the news during the so-called Upfront 2024, the negotiations held in late spring and early summer where network and media executives try to secure advertising deals. Netflix also plans to launch its own advertising technology platform by the end of 2025. Previously, Netflix used Microsoft technology to serve ads.
Netflix also announced that it will stream the two NFL Christmas games this year and at least one holiday game in 2025 and 2026 as part of a new three-season deal. It's part of the company's push for more advertiser-friendly content, including live sports.
Analysts also maintained a $650 price target on Netflix shares. Netflix shares were up 0.2% at $614.52, having risen 65% over the past 12 months.
Netflix's latest moves seem to show that they are on a good path to grow and stay in a leadership position. I wonder if Netflix will meet its announced targets and financial results? We will find out in the coming months.
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