By Gavin Boyle
Nearly half of all new Netflix subscribers now choose the ad-supported tier, revealing that consumers have become comfortable watching infrequent ads to save a few dollars.
“We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,” Netflix CEO Ted Sarandos said in June 2022 when explaining why the streamer added an ad tier. “We added an ad tier; we’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say, ‘Hey, I want a lower price and I’ll watch ads.’”
Three years later, ads have become a crucial component of Netflix’s strategy, allowing the platform to generate revenue based on a user’s watch time rather than collecting the same upfront fee regardless of how much a consumer uses the product. Additionally, the ad tier also opened the door for Netflix to be included in bundles as the reduced subscription price could be made up through ad revenue.
About half of new Netflix customers in the US are signing up to its advertising tier, per @AntennaData.https://t.co/Px4MvuM4Io pic.twitter.com/VqYkdNgzcD
— Lucas Shaw (@Lucas_Shaw) July 14, 2025
“As we celebrate two years since launching Netflix’s ads business, we continue to see positive momentum and growth across all areas of the business. We’re excited to now reach 70MM monthly active users globally and continue to see steady progress across all countries’ base member bases,” Netflix said last November.
While most ad-tier users are satisfied with their experience, every so often, they encounter a problem unfamiliar to those subscribed to Netflix without ads: shows and movies not licensed for the ad tier.
Related: ‘Just Getting Started’: Netflix Reaches 70 Million Users on Ad-Supported Tier
“While the vast majority of TV shows and movies are available with an ad-supported experience, a small number are not due to licensing restrictions,” Netflix explains. “These titles will appear with a lock icon when you search or browse Netflix.”
Nonetheless, this experience happens infrequently enough that many users do not even know this can occur — which can lead to more frustration when they encounter it for the first time.
Netflix’s introduction of ads opened of the flood gates for other streaming services to follow suit. Prior to the summer of 2023 Hulu was the only major streamer with an ad-supported tier; now Apple TV+ remains the lone holdout, and at a price of $9.99 per month, it doesn’t have much lower to go to offer a cheaper tier.
As more and more people are kicked off their family’s streaming plans due to password crackdowns, it is no surprise that Netflix is seeing half of its users opt for ads to save a few dollars.
Read Next: Amazon Looks to Add $3 Billion in Profit Through Prime Video Ads
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