As Netflix adds 8 million subscribers worldwide over the past few months, the streaming company is turning attention to its ad-supported programming — and for good reason. In ad-supported markets, budget-friendly users now account for more than 45% of all new sign-ups, according to the second-quarter earnings report released Thursday. Netflix began phasing out its cheapest ad-free plans for existing subscribers in Canada and the U.K. earlier this month as part of an effort to push subscribers toward its ad-based plans. Next, they plan to discontinue the program in the United States and France. Netflix has also started testing intermission ads that pop up on your screen every time you stop watching.
"Our advertising revenue is growing well and is becoming a more significant contributor to our business," the earnings report said. "The short-term challenge (and medium-term opportunity) is that we're expanding faster than we can monetize our growing ad inventory."
Over the past few months, Netflix has added one of the platform's biggest series, Bridgerton, for a third season. A variety of live content is also planned this year, including a Joe Rogan comedy special, a hot dog eating contest between Joey Chestnut and Tucker Kobayashi, Jack... Jake Paul Vs. Takeru Kobayashi. Mike Tyson matches, NFL Live and next year's WWE Monday Night Raw. Netflix will also launch a new Squid Game multiplayer game this year with the show's second season. Starting next year, Netflix will make significant changes to how it measures growth. It won't reveal how many subscribers it added at the end of each quarter, but will only provide a breakdown of revenue by region. Netflix said the changes "reflect the evolution of the business" as the streaming company focuses on advertising and subscriber retention.