Netflix revealed that it has nearly five million monthly active users to the advertising tier of its service. It is not a big number, six months after the launch of a lower cost Netflix subscription supported by advertising. Yet the news added billions to the market value of the company.

Netflix launched a lower cost subscription with adverts in November 2022. A basic subscription with adverts costs $6.99 in the United States, compared to a basic subscription for $9.99 without adverts, or a standard subscription with full high definition for $15.49 or a premium package with ultra-high-definition for $19.99.

Advertising supported plans are available in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the United Kingdom, and the United States.

In its first ‘upfront’ advertising presentation, held online, Netflix president of worldwide advertising Jeremi Gorman said that six months after launch the advertising tier of the service has nearly five million global monthly active users.

That is less than five million users, not subscribers, which does not sound like a lot. That is not five million people watching an advert. It is five million users that might be able to watch one.

The news appeared to please investors, prompting a rise in the value of Netflix shares to a 52-week high, although way off its peak in 2021.

Netflix has not reported on subscriber numbers for its advertising tier, although it said it has more than doubled since early this year. It also says that more than a quarter of signups in countries where the ad plan is available choose that option.

The global total number of Netflix subscriptions is 232.5 million. It added just 1.75 million in the first quarter of 2023, most of them in the Asia Pacific region.

Netflix Paid Subscriptions 2018-2023 Q1. Source: informitv / company reports

It may well be early days for Netflix in the advertising market, but five million is not a big number, particularly when it is spread across 12 territories.

Ted Sarandos, the co-chief executive of Netflix, suggested a possible new format of advert that plays out over several days and follows subscribers as they watch different shows on the service. “This isn’t going to happen overnight, and maybe not even next year,” he said. “It’s just one idea.”

Some analysts estimate that Netflix may have only a million subscribers on its advertising tier in the United States. In comparison, Hulu has 45 million. YouTube has 2.5 billion users worldwide.