After a modest Q3 2024 which saw 5 million new subscribers join Netflix to total 282.7 million members, it is all systems go in Q4, as the company prepares to test its mettle as a truly scalable global venue for live streaming.
Success will officially place Netflix into the live sports streaming hall of fame alongside the likes of Peacock, Prime Video, and FuboTV. Failure will see Netflix scorned for trying to deliver above its means and banished indefinitely to the VoD realm.
Mid-November 2024 will see Netflix host a boxing mega-event, with Mike Tyson going glove-to-glove against YouTuber-turned-fighter Jake Paul. Weeks later, on Christmas Day, Netflix will host not one but two marquee NFL games.
Every livestreamed event previously hosted by Netflix will pale in comparison to each of these three US-based sporting spectacles taking place this quarter – all available globally for existing Netflix subscribers, at no additional cost.
The only rub for some fans is that Netflix has still not confirmed if viewers of lower tiers, namely the Basic with Ads package, will also have ubiquitous access to these forthcoming live streams.
If so, then there is the question of how ad frequency will compare to the experience on ad-free tiers? Because if we know one thing about the NFL, it’s that ad overkill is inevitable, no matter how much you pay for a seat.
And speaking of advertising, membership on Netflix’s ad plans grew by 35% from Q2 to Q3 2024 – accounting for over 50% of all sign-ups in Q3 2024. Disappointingly, that’s about it for figures on the ad front, and evidently Netflix leadership are still not happy with where the advertising business is, noting that there is much work to do to improve its offering for advertisers.
If next month wasn’t already gearing up to be a milestone month for Netflix, the company is also hoping that November 2024 will be the month that changes advertiser perceptions, with the planned launch of Netflix’s in-house first-party ad tech platform – firstly in Canada before international roll-out in 2025.
Expanded programmatic capabilities with The Trade Desk and Google Display & Video (DV) 360 are also progressing well, apparently (without objective evidence). This suggests that Netflix is ditching Magnite and Microsoft, which made up the other half of the streamer’s programmatic partners.
When Faultline last covered Netflix’s ad tech, in May this year, Netflix said it was staying on with Microsoft, despite a disastrous start which saw Netflix choose speed over efficiency back in 2022, when it contracted Microsoft’s Xandr as its chief ad tech supplier. Bosses soon regretted the decision and last year began the process of switching to an in-house build, after admitting that the Microsoft-made ad tech stack was weak in delivery, validation, and user targeting.
DV 360 is Google’s end-to-end measurement management system, featuring automated bidding for faster insights. The stack integrates natively with third-party ad tech offerings to connect data and workflows across products for improved efficiency – supporting bidding on or exclusion of impressions from dozens of third-party exchanges.
On live streaming, at least Netflix is not attempting to run before it can walk. The infrastructure is deployed and tested, following previous live sports events on Netflix including The Netflix Cup golf tournament and The Netflix Slam one-off singles tennis match.
There is of course Netflix Open Connect, its global in-house CDN, which delivers appliances to ISPs free of charge to increase video quality and to avoid peak streaming fees – effectively inserted as caching nodes into the footprint.
Running multicast to nodes, and then unicast from there to the home, is a future approach which has been widely discussed, but that is a conversation for another day.
Netflix claims to have invested over $1 billion in Open Connect, comprising 18,000 servers distributed across 6,000 PoPs in 175 countries – ultimately bringing content closer to end users to improve viewing experiences.
This private CDN infrastructure will be key to Netflix’s success in live streaming, but at the kind of global scale it expects to reach in December, so will tapping public CDNs, in a multi-CDN set-up with intelligent analytics behind CDN switching and content steering decision-making.
However, Netflix has been secretive about releasing specific viewing figures for its live-streamed events. Its first live comedy special featuring Chris Rock, as well as the ‘Love is Blind’ live reunion, did not see any official numbers publicly announced.
While some third-party services like Nielsen occasionally report data on Netflix content, Netflix itself tends to avoid sharing detailed metrics for individual live events, especially in real-time, focusing more on promoting engagement or generating social media buzz.
Leadership did note in the Q4 2024 results that Netflix accounts for just under 10% of TV time in the service’s biggest markets, which is justification for increasing investments in live events, to incrementally take a larger share of the pie.
The same had previously been said of Netflix’s gaming ambitions. However, the Netflix Games division had its first major setback earlier this month, pulling the plug on its “blockbuster” gaming title designed for serious console and PC gaming.
This was a risky deviation from Netflix’s experiments in casual gaming, mostly rooted in mobile, and the company’s in-house gaming studio has since discovered the hard way that it is very difficult—and very expensive—to develop, launch, and market what is known in the gaming industry as a Triple A title.
But who cares when you have just registered yet another record quarterly profit, with Netflix reporting net income of $2.36 billion for the quarter.