Netflix's ad plan pays off: 55% of Q4 sign-ups opt for ad-supported option
Netflix's revenue grew 16 percent to $10.2 billion in 2024 on the back of ad revenue growth and subscriber additions
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Netflix reported a 30 percent quarter-over-quarter increase in its membership on ads plan in December 2024. According to the streaming platform, its ads plan has become popular among consumers, accounting for over 55 percent of sign-ups in Q4 (October-December 2024).
Netflix's revenue grew 16 percent to $10.2 billion in 2024 on the back of ad revenue growth and subscriber additions.
"We exceeded our ads revenue target in Q4, which was an exciting milestone to get. We've doubled our ads revenue year-over-year last year. We expect to double it again this year so that should give you a sense of the slope of monetization growth that we're on," Netflix CEO, President & Director Gregory K Peters said.
The company added 19 million subscribers in the December quarter of 2024. Consumers are increasingly signing up for ad-supported platforms to save costs. Netflix and FIFA sign US media rights deal for 2027 and 2031 women’s World Cups
"We love our ads plan because it allows us to offer a lower price point for consumers. That's more choice, good accessibility. That is proving to be popular. It means that we obviously have more people that can sign up and enjoy a growing range of entertainment that we've got to offer," Netflix CEO added.
Additionally, the company said it would continue to improve offerings for advertisers to grow advertising revenue.
In Q4, Netflix registered a 16 percent rise in revenue year-over-year, driven by 19 million paid net additions. Netflix said that Q4 was the biggest quarter of net adds in its history, compared to 13 million in Q4 2023 and 5 million in Q3 2024. The company's operating income rose 52 percent YoY.
Netflix, which rolled out the third-party ad tech platform in November 2024, will do the same in the other markets this year, starting with the US in April.
Having its own first-party ad tech platform, allows Netflix to give advertisers “more data sources, more measurement and more incrementality reporting,” Peters said.
Netflix has launched an 'Extra Member' with ads offering in 10 of the 12 countries where it has an ads plan to give members additional choice and flexibility.
Netflix has also raised its ad-supported plan by $1 to $7.99. Peters acknowledged that "Netflix has considerable work ahead in terms of maximizing ad monetization". "We have significant runway to continue growing [ad] revenue," he added.
