Key Points
- Netflix is changing the way it reports the number of people engaged with its ad-supported tier of service.
- The new metric, called monthly average viewers, is based on the company’s evaluation of its own consumer data.
- A financial analyst said the new metric could draw the interest of more prospective advertisers.
Netflix has decided to offer a sneak peek at the number of customers who are using a specific plan on its streaming platform, less than a year after affirming its intention to move away from customer counts entirely.
During a press event on Wednesday, executives in charge of Netflix’s advertising business said the company will now disclose on an irregular basis how many users are engaged with content on its ad-supported plan.
The metric, defined as “monthly average viewers” (MAVs), is based on Netflix’s evaluation of its own data — specifically, the amount of subscribers who watched at least one minute of advertising on the platform in any given month, multiplied by the estimated number of people within a given household.
Netflix didn’t say how it determined the number of people who were in a household — that metric is probably easier to come by, since the company has executed on an aggressive plan to boot freeloaders from its platform and curb unpaid password-sharing among users who live at different addresses.
The metric announced on Wednesday is also a departure from how Netflix previously reported the number of users on its ad-based platform. Earlier this year, Netflix counted 94 million monthly active users, up from 70 million around this time last year, but that count was based on account profiles attributed to a Netflix subscriber, rather than an approximation of how many people lived at a particular home.
Ultimately, it will be up to Madison Avenue — and, to a lesser degree, Wall Street — to determine whether Netflix’s new MAV metric has any credence. But there are indications that the ad-supported plan has gained ground since it was introduced three years ago: In 2023, measurement firm Antenna said more than 1 million Netflix streamers had activated a subscription on the ad-supported plan or switched their premium subscription to the cheaper tier, and consumer research from Parks Associates and Bango shows that Netflix and others have benefitted from stronger customer retention after offering lower-priced plans with ads.
Some financial analysts say the trend is working. Dough Anmuth, the Head of U.S. Internet Equity Research at JPMorgan Chase, said Netflix’s decision to release a unique advertising-focused metric should court more advertiser interest, according to Yahoo Finance. Anmuth also forecast Netflix’s ad revenue to be nearly $3 billion by the end of this year, up from $1.4 billion last year; he also said Netflix’s ad revenue should jump 45 percent to $4.2 billion by the end of next year.
