Netflix’s recent quarterly earnings report has sent ripples through the streaming industry. In the fourth quarter of 2024, Netflix added 18.9 million new subscribers, exceeding analyst expectations and elevating its global user base to over 300 million. Netflix attributed this growth to the platform’s content strategy, including the release of highly anticipated original series and the integration of live events. The return of the acclaimed series “Squid Game” and sports events like the high-profile boxing match between Jake Paul and Mike Tyson were essential to attracting new viewers.
These developments underline Netflix’s evolving approach to content delivery, blending traditional streaming with live programming to engage users. Netflix’s growth shows how connected TV gives advertisers the ability to reach audiences in real-time, relying on the platform’s extensive reach and user engagement.
Growth of the Netflix Ad-Supported Tier
A significant driver of Netflix’s recent success is the rapid adoption of its ad-supported subscription tier. In the latest quarter, this tier accounted for over 55% of new sign-ups in markets where it is available, reflecting a strong consumer appetite for more affordable, ad-inclusive viewing options. This growth broadens Netflix’s audience base and enhances its appeal to advertisers seeking to engage with a diverse viewership.
The ad-supported model offers advertisers the advantage of reaching consumers who are receptive to advertising content in exchange for lower subscription costs. This demographic is particularly valuable, as they are often more open to brand messaging and promotions. For businesses, this means access to a growing segment of the streaming audience that balances cost-consciousness with a willingness to engage with ads, which provides a fertile ground for targeted advertising campaigns.
How Netflix Is Embracing Live Sports
Netflix’s foray into live sports represents a calculated move to enhance subscriber engagement and attract new audiences. Rather than pursuing extensive rights to regular-season sports, Netflix focuses on exclusive, high-profile events that generate significant buzz and viewership. The Jake Paul vs. Mike Tyson boxing match drew more than 60 million live global viewers and setting a new benchmark for the platform.
This “anti-ESPN” strategy allows Netflix to capitalize on the excitement of marquee events without the substantial investment required for ongoing sports broadcasting rights. Hosting live events makes it possible for Netflix to create viewing experiences that differentiate Netflix from competitors and offer advertisers concentrated exposure during peak viewing times. This approach drives subscriber growth and opens new avenues for advertising partnerships centered around exclusive, must-watch content.
Three Key Takeaways for Advertisers
What can advertisers learn from Netflix’s explosive quarter? Well, a lot. Here are some key takeaways:
Ad-Supported Models Are Flourishing for Netflix and Its Competitors
Netflix’s ad-supported tier is part of a larger industry trend as streaming platforms meet growing consumer demand for affordable viewing options. Hulu has long been a pioneer of the ad-supported model, with more than 70% of its subscribers on ad-inclusive plans, demonstrating that audiences are increasingly comfortable with ads as part of their streaming experience. Disney+ launched its ad-supported tier in 2023, quickly attracting millions of subscribers, while Peacock and Paramount+ have leaned heavily into this model to differentiate themselves from competitors like Apple TV+ and Max, which still emphasize premium, ad-free plans.
This shift reflects broader changes in consumer behavior, with viewers opting for value-driven models in a fragmented market. Advertisers should take note of how platforms like Hulu integrate limited ad loads (typically two to four minutes per hour) to maintain a user experience, while still providing highly targeted, impactful placements.
Platforms are also innovating with dynamic ad insertion, enabling ads to be tailored based on factors like time of day, viewer location, or real-time behavior. Advertisers who engage with multiple ad-supported platforms can experiment with different ad formats—interactive, shoppable, or episodic—to uncover what resonates with diverse audiences, while simultaneously benefiting from enhanced targeting capabilities and rich first-party data insights.
Live Events Are Making Their Mark
Live sports is one of the most important developments in connected TV advertising. Other streaming platforms are also exploring live programming as a way to drive growth, particularly for their ad-supported tiers. Hulu, for example, has successfully integrated live sports through its bundle with ESPN+, which includes access to exclusive games, UFC events, and college sports. Advertisers on Hulu can tap into highly engaged audiences during live sports broadcasts, applying dynamic ad placements that align with real-time game moments to maximize visibility and impact.
Similarly, Amazon Prime Video’s exclusive rights to NFL’s Thursday Night Football showcase how live events can become a cornerstone of ad-supported strategies. Amazon enhances these broadcasts with features like “X-Ray for Sports,” offering real-time player stats and replays, which create additional opportunities for brands to integrate into the viewing experience in creative, contextually relevant ways. Peacock has also leaned into live sports and events, particularly with its Premier League coverage and Olympics programming, providing advertisers with access to massive, diverse audiences.
For advertisers, the lesson is clear: live events on streaming platforms create shared cultural moments, much like traditional TV used to with major broadcasts. By aligning campaigns with these events (whether through sponsorships, interactive ad formats, or custom integrations) advertisers can amplify their impact and reach audiences during peak engagement.
Advertisers should recognize that live events often drive spikes in new subscriptions, especially to ad-supported tiers, giving brands a chance to make a strong first impression on fresh viewers who may not typically interact with streaming ads.
Advanced Targeting Are Improving Connected TV Ad Effectiveness
Netflix’s development of advanced targeting capabilities shows how streaming platforms are applying detailed viewer data. Amazon Prime Video, with its vast e-commerce ecosystem, has already set a high bar for targeted advertising by integrating shopping data with viewer behavior. For example:
- An ad shown during Thursday Night Football on Amazon can be personalized based on a user’s purchase history, creating a connection between ad exposure and consumer action.
- Disney+ has started rolling out sophisticated targeting tools tied to its extensive first-party data from Disney Parks and other business segments, allowing advertisers to deliver ads tailored to lifestyle and family-oriented content preferences.
- Paramount+ is another competitor pushing advanced targeting with its integration of ViacomCBS’s vast content library and audience insights. The platform uses AI-driven tools to match ads with precise audience segments, such as fans of crime dramas or viewers of family-friendly animation, enabling brands to engage specific demographics with unparalleled accuracy.
- Peacock, backed by NBCUniversal, offers advanced targeting through its proprietary technology, blending data from its streaming service with insights from linear TV to deliver hybrid campaigns that optimize for both formats.
For advertisers, the increasing sophistication of targeting across platforms means greater ROI potential. These tools allow brands to go beyond broad demographic categories to target niche audiences based on viewing habits, location, and even real-time behavior.
Platforms like Netflix and its competitors are also experimenting with interactive ad formats, such as clickable ads and shoppable video, which make targeting even more effective. As these capabilities evolve, advertisers will need to stay ahead of trends by investing in creative strategies that resonate deeply with specific audience segments, making their campaigns feel native and engaging across streaming environments.
Contact True Interactive
While Netflix remains a dominant force in streaming, advertisers must avoid putting all their resources into a single platform. The landscape is diversifying, with ad-supported options on services like Hulu, Paramount+, and Peacock offering unique opportunities.
True Interactive can help. We know the connected TV space and partner with businesses to build their visibility. Contact us to learn how we can help you.
