• by Wayne Friedman , January 18, 2024

News that Netflix has now 23 million ad-supported “users” for its year-old ad-option “Basic With Ads” has media analysts expecting more investment in this area for the streaming platform business.

“We think Netflix’s number one initiative for 2024 will be investing to grow ads longer-term,” says Steven Cahall, media analyst of Wells Fargo Securities.

Those 23 million "users," Cahall says, translate into 13 million advertising video-on-demand subscribers -- from the rough average of having two users per each subscribing account.

Cahall figures at around two hours a day of viewing for each of those viewers/users, who also see around eight  advertising spots per hour of programming.

At an estimated $30 CPM -- the cost per thousand viewers--  times an average of 30 days per month results in a gross ad ARPU (average revenue per user) of $14 a month per user. (This totals around $29 a month for two users).

But then taking out expenses for all its advertising tech and other factors brings the net ARPU way down. Cahall says this includes advertising tech provided by Microsoft's Xandr’ -- as well as frequency caps, and “lower sell-out levels due to limited reach.”

This would come to around $9 a month ARPU.

Overall, Cahall estimates fourth-quarter net global subscriber additions to now be 10.4 million for all Netflix's programming packages.

In the last reported third-quarter period, Netflix grew 8.8 million global subscribers over the second quarter to total 247.2 million.

Total U.S./Canada subscribers came in at 77.3 million.