Netflix’s ad tier is scaling

Netflix spent years training viewers to pay for a service with no commercials, and now one of its fastest-growing businesses is selling commercials anyway. In January 2026, the company said ad revenue for 2025 topped $1.5 billion and could double again in 2026. (cnbc.com) That ad push is happening at the same time Netflix is charging more for every major plan in the United States. In January 2025, the ad-supported plan rose from $6.99 to $7.99 a month, the standard plan without ads went from $15.49 to $17.99, and premium moved from $22.99 to $24.99. (cnbc.com) The trick is simple: one lever keeps Netflix affordable enough to keep price-sensitive households in the funnel, and the other lever extracts more money from households willing to pay for no ads. It is the streaming version of an airline selling both economy seats and extra-legroom seats on the same plane. (cnbc.com) Netflix only launched its ad plan in November 2022, and at the time it was a much smaller product. The original United States offer cost $6.99 a month, carried an average of 4 to 5 minutes of ads per hour, topped out at 720p video, and did not allow downloads. (about.netflix.com) The scale-up has been fast. Netflix said the ad-supported plan had 40 million global monthly active users by May 2024, and more than 40% of signups in countries with the ad plan were choosing that cheaper option. (about.netflix.com) A year later, Netflix told advertisers that the ad plan reached more than 94 million global monthly active users. The company also said that audience included more 18-to-34-year-olds in the United States than any broadcast or cable network, which is exactly the pitch advertisers want to hear. (about.netflix.com) That audience growth only matters if advertisers can buy ads easily and prove the ads worked. Netflix spent 2024 and 2025 building its own in-house system, called the Netflix Ads Suite, so brands could target viewers, match their own customer data, and buy inventory through automated systems instead of custom hand-holding. (about.netflix.com 1) (about.netflix.com 2) In March 2026, Netflix added more tools on top of that system. The company said advertisers in the United States would be able to use audience data from Amazon Demand-Side Platform and Yahoo Demand-Side Platform, and Netflix also rolled out its own conversion application programming interface to show whether campaigns produced real business results. (about.netflix.com) Netflix is also selling advertisers a different kind of television inventory than old cable ever could. In 2024, the company said more than 70% of ad-supported members watched for over 10 hours a month, and it told advertisers those viewers were about twice as likely to respond to an ad as viewers on other streaming services and linear television. (about.netflix.com) So the business now has two cash registers running at once. Subscription price hikes lift revenue from existing members, and the ad tier turns lower-priced accounts into something closer to a full-price customer once ad dollars are layered on top. (cnbc.com 1) (cnbc.com 2) That is why investors are watching the next quarter so closely. Netflix ended 2025 with 325 million global subscribers, and if the company can keep growing both monthly prices and ad sales without pushing viewers away, it stops looking like a streamer that happens to sell ads and starts looking like a global television network with a subscription business attached. (cnbc.com)