Netflix has gained 8 million more subscribers worldwide in recent months, so it's turning its attention to its ad-supported plan, and for good reason. The budget plan now accounts for more than 45 percent of all new subscribers in markets where advertising is available, according to its data. second quarter earnings report Results published on Thursday.
As part of its efforts to encourage subscribers to jump on its ad-supported plan, Netflix began phasing out its cheapest ad-free plan for existing subscribers in Canada and the U.K. earlier this month. It plans to discontinue the plan in the U.S. and France next. Netflix has also begun testing pause ads, which appear on-screen whenever you stop watching what you're watching.
“Our advertising revenue is growing positively and becoming a more meaningful contributor to our business,” the earnings report reads. “The near-term challenge (and medium-term opportunity) is that we are growing faster than our ability to monetize our growing advertising inventory.”
Starting next year, Netflix will make a fundamental change to how it measures growth. Instead of disclosing 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 streaming service turns its attention to advertising and retaining subscribers.
