A different kind of Netflix ad: a billboard for ’Beverly Hills Cop: Axel F' (Beata Zawrzel/NurPhoto via Getty Images)

Adding Down?

Netflix's ads tier is growing but it's not the savior the company hoped for — yet

Last year they were telling a different story about ads profitability.

7/19/24 9:24AM

A year ago, Netflix said it was making more money from ads subscriptions than the more expensive ad-free options. During 2023’s Q2 earnings call, Chief Financial Officer Spence Neumann said, “Our overall ads ARM continues to be higher than basic ad free globally,” referring to average revenue per membership, which is a combination of the subscription fee and ads revenue.

That seems to have changed. “Currently our ads ARM is lower than our non-ads ARM,” Co-CEO Greg Peters said on the earnings call yesterday.

What happened?

“Currently because we've been scaling so rapidly, we're racing behind essentially to fulfill all of that increasing inventory. And we're lagging in that regard,” Peters said.

In other words, it seems people are signing up for the ads tier so quickly, Netflix has more room to show ads than it has deals with advertisers or the ad tech is not good enough to meet this increased demand, meaning they are not able to effectively monetize all these new views with ads.

“We're on track to achieve our critical scale goals for all of our ads countries in 2025,” he said.

“We're adding more sales folks. We're adding more ads operation folks, building our capabilities to meet advertisers. A big component of that is giving advertisers more effective ways to buy Netflix.”

Netflix already appears to be shaking up its ad team. Yesterday, media industry vet Peter Naylor became the second of two senior executives to leave the ad team.

Netflix introduced its lower cost ads tier in limited markets a year and half ago. In May the company said its ad-supported tier had 40 million global subscribers, or almost double what it was in January. That meant ads subscribers represented about 15% of all subscriptions.

Netflix reported that this quarter its ads tier grew 34% from last quarter, but didn’t say how many subscribers that was. It did say a full 45% of new signups in ads markets was for the ad tier last quarter, growing from 40% in Q1.

For now, Neumann called ads a “meaningful contributor” to the streaming company’s revenue.

“When you get into 2026 and beyond, it can be even more meaningful, and hopefully it becomes the point where it is a primary contributor given all that engagement and reach that we're building,” he said.

Jon Keegan47m

Anthropic’s move to diversify from Nvidia chips may give it an edge against OpenAI

Anthropic has reportedly been upping its revenue forecasts, and appears to be catching up to market leader OpenAI.

Anthropic’s thriving API business is juicing its revenues, and it has made some strategic moves that are boosting its margins.

Unlike OpenAI’s all-Nvidia strategy, Anthropic has diversified to also use chips from Amazon and Google, according to a report from The Information.

The cheaper, more efficient chips may be part of the reason that Anthropic is projecting that it will be profitable in 2027.

The report also notes that OpenAI’s expensive $40 billion “backup” server build-out is part of its plan to eventually monetize hundreds of millions of nonpaying ChatGPT users, while Anthropic is generating 80% of its revenue from paid API access and isn’t spending as much to serve its much smaller base of free users.

Anthropic Projects Cost Advantage Over OpenAI

Unlike OpenAI’s all-Nvidia strategy, Anthropic has diversified to also use chips from Amazon and Google, according to a report from The Information.

The cheaper, more efficient chips may be part of the reason that Anthropic is projecting that it will be profitable in 2027.

Rani Molla4h

In hopes of teasing out more sales, Tesla is renting cars for $60 a day

After a record sales quarter, analysts expect Tesla sales to fall in the current quarter, as the end of the government’s $7,500 EV tax credit crimps electric vehicle sales in general.

Tesla has a plan: it’s now renting Teslas from select dealerships, starting in Southern California, for up to a week at a time, starting at $60 a day.

The company has thrown in freebie features like Supercharging and Full Self-Driving (Supervised), and is giving those who choose to buy a Tesla within a week of their rental experience a $250 credit.

Will that help keep Tesla sales from falling? (Analysts polled by FactSet forecast sales in the fourth quarter to be down 9% and the full year to fall 7%, compared to the same period a year earlier.) Probably not, but supposedly car sales don’t really matter anymore to Tesla anyway: Tesla has its sights set on owning a future without poverty or crime but with driverless robotaxis and robot surgeons.

Shares of Tesla were up 2.3% in premarket trading as broader markets rose. Through Friday’s close, they were up 13% for the year, slightly underperforming the S&P 500.

Tesla can’t sell its cars anymore so it is renting them now

The company has thrown in freebie features like Supercharging and Full Self-Driving (Supervised), and is giving those who choose to buy a Tesla within a week of their rental experience a $250 credit.

Shares of Tesla were up 2.3% in premarket trading as broader markets rose. Through Friday’s close, they were up 13% for the year, slightly underperforming the S&P 500.

Rani Molla11/7/25

Amazon expands low-price Haul section to 14 new markets as Amazon Bazaar app

Amazon is expanding its low-cost Amazon Haul experience to a new stand-alone app called Amazon Bazaar.

Amazon launched its Temu and Shein competitor a year ago as a US mobile storefront on its website and has since expanded to about a dozen markets. Consumers could purchase many items for under $10, as long as they were willing to stomach longer delivery times.

Now, thanks to success in those places, the programming is expanding to 14 new markets — Hong Kong, the Philippines, Taiwan, Kuwait, Qatar, Bahrain, Oman, Peru, Ecuador, Argentina, Costa Rica, the Dominican Republic, Jamaica, and Nigeria — with a new app and name: Amazon Bazaar.

“Both Amazon Haul and Amazon Bazaar deliver the same ultra low-price shopping experience, with different names chosen to better resonate with local language preferences and cultures,” the company said in a press release.

Amazon extends Haul’s ultra low-price shopping experience to 14 new destinations with new Amazon Bazaar app

Big Tech’s most important infrastructure is at the bottom of the sea

While data centers on land are getting all the attention, Big Tech’s vast network of undersea fiber-optic cables carry 99% of all international network traffic.

Jon Keegan11/7/25

After watching small drones reshape the battlefield in Ukraine, the US Army has announced plans to buy 1 million drones over the next two to three years, according to a report from Reuters.

The military threat of China’s dominance of the quadcopter-style drone industry is also driving the decision. But China’s control over much of the supply chain for drones, including rare earth magnets, sensors, and microcontrollers, will make it much harder for American drone manufacturers to catch up.