Netflix’s shift to an ad-supported model is starting to pay off, as the company reported that its advertising revenue for 2025 surpassed $1.5 billion (21/01). This represents about 3% of the streaming giant’s total annual revenue, and Netflix expects ad revenue to double in 2026.

Co-CEO Greg Peters highlighted the opportunity during the fourth-quarter earnings call, stating, “We’re making good progress,, and the opportunity ahead of us is massive.”

Subscriber Growth Contributes to Revenue Gains

Netflix ended 2025 with 325 million global subscribers, an increase of roughly 23 million from the end of 2024. The growth follows previous annual increases of nearly 41 million in 2024 and almost 30 million in 2023.

The company also reported overall revenue growth of almost 16% and a net income rise of 26% in 2025, indicating the combined effect of subscriber growth and the emerging ad-supported tier.

Analysts Provide Context on Advertising Performance

Wall Street analysts noted that Netflix’s ad revenue disclosure fell short of some forecasts, suggesting the ad business is taking longer to scale. Deutsche Bank commented, “The last couple of years were slower out of the gate than we had estimated. However, advertising revenue growth is hitting its stride and should yield a similar contribution to revenue growth as we had estimated in our pre-4Q forecast.”

Robert Fishman of MoffettNathanson added, “At least now we can finally have a better understanding of the contribution from advertising to total growth and can return to core subscription revenues.”

Netflix’s stock fell about 2% following the earnings report.

Ad-Supported Plans as a Growth Strategy

Netflix launched its cheaper, ad-supported tier in late 2022, alongside efforts such as a crackdown on password sharing to boost subscriber growth. Peters noted that although a revenue gap remains between standard and ad-supported plans, “that gap is narrowing.”

He added, “And while, because there’s a gap, it means we’re under-realizing revenue growth in the near term, it also, therefore, represents an opportunity for us,” pointing to upgrades in technology and ad capabilities to drive further growth.

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This article was created with AI assistance.

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