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Netflix is getting more comfortable with ads

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With Netflix raking in 8 million more global subscribers over the past few months, the streamer is turning its attention to its ad-supported plan — and for good reason. The budget-friendly tier now accounts for over 45 percent of all new signups in markets where ads are available, according to its second quarter earnings report results released on Thursday.

As part of its efforts to nudge subscribers to its ad plan, Netflix started phasing out its cheapest commercial-free plan for existing subscribers in Canada and the UK earlier this month. It plans on discontinuing the plan in the US and France next. Netflix has also started testing pause ads, which appear on your screen whenever you stop what you’re watching.

“Our ad revenue is growing nicely and is becoming a more meaningful contributor to our business,” the earnings report reads. “The near term challenge (and medium term opportunity) is that we’re scaling faster than our ability to monetize our growing ad inventory.”

Starting next year, Netflix will make a fundamental change to the way it measures growth. Instead of revealing how many subscribers it added at the end of each quarter, it will only provide a breakdown of revenue by region. Netflix says the change “reflects the evolution of the business” as the streamer turns its attention to advertising and keeping subscribers.



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