By Gavin Boyle
More than three years since Netflix introduced an ad-supported tier, two in five users now opt for this plan, but the streamer is far from being a titan in the ad space.
“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 co-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.’”
2025 proved to be a big year for ads on the streamer as usage of that tier was up 14%, raising the total percentage of Netflix subscribers watching ads to 40%. The continued growth in ad-supported subscribers comes from rising prices, along with the need for younger users to create their own accounts when they leave home, rather than being allowed to continue to log into their parent’s account.
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While 40% is a major group of people, especially given that its total subscriber base sits around 190 million, Netflix still lags behind Disney+ and Prime Video. Ad-supported subscribers account for 44% of Disney+’s user base, while Prime Video holds a staggering 82% ad-supported users.
Prime Video’s dominance in ad-supported streaming largely comes from how it rolled out ads onto its site. While every other streamer chose to introduce an ad-supported tier that was cheaper than their least expensive ad-free option, Prime Video started everyone at the ad-supported tier and allowed them to pay extra to remove ads. While it only costs $2.99 per month to remove ads, most Prime Video subscribers have chosen to avoid this extra cost.
The platform’s dominance in the ad-supported tier may also come from the fact that many people using the site see the streaming service as an added benefit to an Amazon Prime subscription. Thus, the extra $3 to remove ads does not feel worth it, compared to the extra monthly fee to go ad free on other streamers.
Ad-supported tiers, however, tend to be more lucrative for companies as they are rewarded for how much a viewer uses their platform, rather than being paid a flat fee regardless of use. Thus, platforms would rather that users pay the ad-free price and generate more revenue for the platform by watching ads.
While Netflix remains a major player in the streaming industry, it is interesting to see a part of the ecosystem where it is not quite the top dog.
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