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  • Netflix stock rose on Thursday after the company pitched advertisements to advertisers this week.
  • The streaming service said it had five million monthly active users for its cheaper, ad-supported option, and 25% of its new subscribers would sign up for the latest tier.
  • Netflix introduced a cheaper, ad-supported option late last year after subscriber growth stalled.

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Netflix saw shares rise more than 9% on Thursday shortly after revealing details of its new ad-supported tier that suggested the business model is starting to pay off.

The streaming service said this week that it has five million monthly active users for its cheaper, ad-supported option, and 25% of its new subscribers sign up for the tier in the regions where it’s available.

The update came Wednesday at Netflix’s first pitch to advertisers, the first time Netflix has entered the industry competition so-called upfront presentations. This year features top media companies including Comcastis NBCUniversal and Warner Bros. Discovery presented advertising-financed streaming options in their lectures.

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Netflix stock rallied on Thursday, shortly after the company announced new details about its ad-supported tier of streaming.

Netflix rolled out its ad-based option in late 2022 after subscriber growth stagnated that quarter dropped his stock.

The company Posted While the company had mixed financial results in its most recent quarter, it said it added 1.75 million subscribers. Netflix is ​​also gearing up for the broader launch Action against the disclosure of passwordsanother step to increase sales.

Media companies that were once focused on getting subscribers for their fledgling streaming services have now turned their attention to making their businesses profitable. To achieve this, some have reduced the cost of content spend and relied on advertising models.

Last week, as Disney announced its earnings, CEO Bob Iger noted that the company was considering the ad-supported option of its Disney+ streaming service as another possibility to help the streaming business become profitable. Disney+ lost four million subscribers during the quarter.

Netflix’s ad tier, the costs $6.99 per month and contains 15- or 30-second commercials before and during the content, represents a reversal for the company’s management, which had long said it would not run ads on the platform.

Netflix introduced the advertising option in cooperation with Microsoft. Its content will be rated by Nielsen later this year to help advertisers better understand reach.

Shortly after launch, Netflix founders and former CEO Reed Hastings authorized He was slow to start advertising on the platform. When Netflix introduced the ad tier in November, it was $1 cheaper than Disney+ and Hulu’s ad-supported options.

Netflix co-CEO Ted Sarandos said the company is ready to do so probably offer Multiple subscription plans with promotions in the future, highlighting the potential to attract more subscribers.

— CNBC’s Alex Sherman contributed to this report.

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