Expansion of Netflix Subscriber Base by 5 Million Users in Q3
Netflix's advertising business is making significant strides, as shown in the company's Q3 2024 financial results. The streaming giant reported a 15% year-over-year increase in revenue to $9.8 billion, and added more than 5 million new subscribers during this period.
The company's focus on the ad business is not expected to alter its overall revenue growth trajectory in 2025. In fact, Netflix anticipates a 15% year-over-year growth in total company revenue for 2024.
The ad-related progress was not discussed in the context of specific revenue or subscriber figures for Q3 2024. However, it is worth noting that over 50% of Netflix's signups in Q3 2024 were from its ad plan in its ads countries. This suggests that the lower price point of the ad plan is proving to be popular with consumers.
Membership on Netflix's ad plan grew 35% quarter over quarter in Q3 2024, indicating a steady increase in adoption. Interestingly, view hours per membership on Netflix's ad plan are similar to engagement on its standard plan in its 12 ads countries.
Netflix is on track to reach critical ad subscriber scale for advertisers in all of its ads countries in 2025. However, there is no information available about the ten countries where Netflix aims to reach this critical scale.
The U.S. upfront-closing deals with all major holding companies and independent agencies were completed in 2024, another positive sign for the ad business.
Netflix's net income in Q3 2024 was $2.9 billion, up from $1.9 billion a year earlier. Earnings per share for Netflix hit $5.40 in Q3 2024, up from $3.73 a year ago. The ad monetization progress is in line with the company's expectations for 2024, and the advertising initiative is a new revenue stream that is being built.
However, the company does not expect ads to be a primary driver of revenue growth in 2025. The company's advertising effort is making "good progress" as it approaches the second anniversary of the launch of its ad business. It is still early days for the company's advertising initiative, according to the shareholder letter.
In conclusion, Netflix's advertising business is showing promising growth, with a steady increase in adoption and engagement. While it is not expected to be a primary driver of revenue growth in 2025, it is a significant new revenue stream for the company. The company is on track to reach critical ad subscriber scale for advertisers in all of its ads countries in 2025, suggesting a bright future for its advertising business.
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