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Netflix’s ad tier is becoming a central business, not a side experiment
Netflix’s ad-supported subscription plan has reached 40 million monthly active users, nearly doubling from the 23 million reported in January. That is a meaningful shift in a business that spent years defining itself in opposition to traditional television economics. Netflix was built on subscriptions: viewers paid to avoid commercials, and the company used that predictable revenue to fund an expanding library of original programming. Advertising is now part of the core model.
The speed of the ad tier’s growth matters as much as the headline figure. Streaming has matured into a crowded market where subscriber additions are harder to sustain, especially for services that have already reached a large share of potential households. An ad-supported plan gives Netflix another way to bring in price-conscious customers while creating a second source of revenue from the same audience. The company is no longer asking only how many people will pay for Netflix; it is also building a business around how valuable those viewers are to advertisers.
That strategy appears to be working. Netflix says the ad plan accounts for 40% of all new signups in markets where it is available. The company has also eliminated its cheapest commercial-free plan in the U.S. and U.K., encouraging more users toward the ad-supported tier. This is a practical, if slightly blunt, form of product design: make the lower-cost entry point an ad plan, and advertising becomes the default compromise for subscribers looking to limit their monthly spending.
For viewers, the trade-off is familiar from television and increasingly common across streaming. Lower subscription costs come with commercial interruptions. For Netflix, the calculation is more complex. It needs enough advertising to make the tier economically attractive without making the experience feel like the traditional TV model many customers originally left behind. The 40 million monthly active-user figure suggests there is substantial demand for that balance, though the long-term test will be whether engagement remains strong as the advertising business becomes more mature.
Netflix wants more control of the advertising stack
Netflix has announced plans to launch its own advertising platform, ending its reliance on Microsoft for this technology. Microsoft will continue as a programmatic advertising partner, but Netflix’s new platform will also include partnerships with The Trade Desk, Google Display & Video 360, and Magnite.
The move is important because advertising is not simply a matter of selling time around shows. The underlying technology determines how inventory is made available, how campaigns are bought, how audiences are reached and how the company develops its relationships with advertisers. Bringing the platform closer to home gives Netflix greater control over a business it initially entered with outside help.
Microsoft’s continuing role also shows that this is not a clean break from the company that helped Netflix get its ad offering off the ground. Netflix is instead widening its set of connections to the advertising market. That may make it easier for agencies and buyers already using major ad-tech platforms to include Netflix in their planning. It also places Netflix more directly into the competitive machinery of digital advertising, where ease of buying and confidence in delivery can matter as much as the content surrounding an ad.
Netflix plans to test the ad-tech platform in Canada later this year. A U.S. launch is slated for the end of Q2 2025, followed by a global rollout by the end of 2025. The staged approach makes sense for a company building an infrastructure that will affect advertisers, subscribers and programming across markets. Advertising systems are not especially visible to viewers when they work well, but they can shape everything from ad frequency to the kinds of campaigns a service can attract.
Live NFL games give advertisers an event they cannot get from a catalog
Netflix is pairing its ad push with a deal to stream National Football League games, its first significant venture into live sports. Starting with two games on Christmas Day this year, Netflix will also stream at least one game on Christmas Day in both 2025 and 2026. Financial terms were not disclosed, though sources suggest Netflix will pay approximately $75 million per game.
The NFL arrangement is strategically different from adding another series or film library. On-demand streaming is built around convenience: viewers can watch when they choose. Live sports reverse that dynamic. They create a shared appointment, pull audiences to the service at the same moment and offer advertisers something that scripted catalog viewing often cannot: an audience that is less likely to postpone watching until later.
Live sports have long been a stronghold of broadcast TV for precisely that reason. They remain one of the few categories able to generate collective attention at scale in an era of fragmented viewing. For Netflix, the Christmas Day games are a focused entry point rather than a wholesale transformation into a sports network. Still, they show the company’s interest in using live events to deepen engagement, attract new subscribers and provide premium opportunities for its advertising business.
The price suggested by sources also illustrates the pressure behind the strategy. Major sports rights are expensive because they are scarce, culturally prominent and difficult for competitors to replicate with original entertainment alone. Netflix does not need to own every major sports package for the NFL deal to matter. Even a limited slate can serve as a high-profile demonstration of its ability to handle live programming and sell advertising around it.
Scale gives Netflix room to make these bets
Netflix first introduced its ad-supported plan in November 2022, aiming to boost revenue amid slowing subscriber growth. It now has 270 million total subscribers, well ahead of Disney+ at 117.6 million and Warner Bros. Discovery’s Max at 99.6 million. Those comparisons do not settle every question about streaming competition, but they help explain why Netflix can pursue advertising technology and live programming from a position of relative strength.
The company’s scale makes its advertising audience more compelling, while its large subscription base gives it room to experiment without making the ad tier its only source of income. Rivals are facing their own difficult choices around programming spending, subscriber growth and the decline of traditional TV audiences. Netflix is confronting the same broader shift in consumer behavior, but it has a larger base from which to build.
Its decision to stop providing quarterly subscriber updates is part of that change in emphasis. The move points investors and observers toward profitability and cash flow rather than sheer subscriber totals. That does not mean subscriber growth has become irrelevant. It means a subscriber is no longer the only unit that matters. The value of the ad-supported customer depends on subscription revenue, advertising demand, viewing habits and the costs required to keep that customer engaged.
Netflix’s leadership is also visible in how competitors discuss it. Disney executives have referred to Netflix as the “gold standard” of streaming. The phrase is revealing because Netflix’s advantage is not just that it has more subscribers. It has repeatedly adjusted its model as the market changed, from mail-order entertainment to streaming, then from a subscription-only service to one that treats advertising and live programming as serious tools.
A larger Netflix ad business will reshape the market around it
Netflix’s expansion adds supply to the streaming advertising market, with consequences for pricing and competition. Advertisers have more places to put video budgets, while other streaming services must make a clearer case for their own audiences and inventory. That does not automatically make the market easier for buyers; more supply can also make attention harder to win. But Netflix gives advertisers access to one of streaming’s largest audiences at a time when traditional TV is under pressure.
The advertising market remains challenging for legacy media companies, and broader economic uncertainty can make marketers cautious. Yet digital and streaming ad revenues are on the rebound. Netflix is positioning itself to benefit from that shift while reducing its dependence on subscription increases alone.
The larger story is not that Netflix has abandoned its original model. It is that the company is adapting it. The ad-supported tier, the planned in-house platform and the NFL games all point in the same direction: Netflix wants to be a place where viewers subscribe, advertisers spend and major live events can happen. That is a more complicated business than the old commercial-free pitch, but it may be the necessary one for a streaming leader operating in a market that no longer rewards growth for growth’s sake.
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