The streaming media frenzy is changing! From subscription dominance to "monetizing viewing time," advertising packages elevate Netflix (NFLX.US) to a new growth engine

The China Securities Journal APP has learned that as the global streaming leader Netflix (NFLX.US) recently raised its “ad-free standard subscription plan” significantly to $20, the threshold for streaming to transition toward traditional TV seems to be getting closer. Netflix has increased the ad-free standard plan to about $20/month, while the ad-supported plan is around $9/month, marking a shift in the streaming business model from “pure subscription fees” to a “subscription + advertising revenue” dual engine. How much users pay is no longer the only key; how long users can watch and how much ad exposure they generate are becoming new standards for platforms to measure user value.

Streaming companies seem to be discovering that their most valuable customers may not be those who pay the most for subscriptions. Instead, increasingly valuable are those viewers who watch the longest.

This change is driven by a typical transformation: the industry is shifting from a single subscription model to a combined model of subscription fees and advertising. Since ads are sold based on viewership, the longer subscription users watch on streaming platforms, the more related revenue these viewers can generate.

By Q4 2025, Netflix reports that its global paid memberships have surpassed 325 million, ranking it at the top tier/leader among global subscription streaming platforms; when measured by subscription scale, global coverage, content consumption time, and original content industrialization capability, Netflix remains the global streaming leader.

Popular global original series such as “Squid Game,” “Stranger Things,” “Wednesday,” “Bridgerton,” and “Monster: The Jeffrey Dahmer Story” are all Netflix IP; non-English hits like “Squid Game,” “Money Heist,” “Dark,” “Alice in Borderland,” and “Kingdom” showcase Netflix’s advantage in exclusive IP. These contents demonstrate Netflix’s edge over traditional Hollywood platforms, as it can package local content from Korea, Spain, Germany, Japan, and other countries into global hits.

Subscriptions Are No Longer the Only Gold Mine—Netflix Brings Streaming Back to the “Advertising Era”

In March this year, Netflix raised prices for the second time in just over a year, pushing its standard ad-free plan to about $20 per month, while the ad-supported plan remains at only $9. This indicates that how much content a subscription user watches may be just as important, or even more so, than how much they pay upfront.

“This is a double billing day,” said Kevin Krim, President and CEO of EDO. EDO is a technology company that measures the effectiveness of streaming and linear TV advertising. Krim said, “As long as ad-supported subscription users stay engaged with content and ads, their value will be at least comparable to, or even higher than, that of ad-free subscribers.”

After years of resisting ads, Netflix is now actively shifting toward this classic revenue model, rapidly building its advertising business outside of its subscription services. “We are making good progress, and the opportunities ahead (in advertising) are huge,” said Greg Peters, co-CEO of Netflix, after the company’s latest earnings report.

Hulu, owned by Disney, has long combined subscription revenue with advertising income, and Paramount, Warner Bros., and Comcast are also pushing similar strategies on their respective streaming platforms.

However, Netflix’s typical advantage comes from its global IP scale and the viewing time of its audience. According to the company’s Q4 2025 shareholder update, Netflix has over 325 million global subscribers; in just the first half of 2025, viewers watched more than 95 billion hours of content, providing far more opportunities to generate advertising revenue over time than competitors.

Peters said that narrowing the gap in value between ad-supported and ad-free subscribers is a major focus for future growth. He stated during the recent earnings call that “the gap is shrinking,” and closing this gap will be a “key opportunity for significant future revenue and profit growth.”

Ad-supported users pay higher monthly subscription fees directly, such as about $19.99 for the standard ad-free plan; ad-supported users pay only about $8.99 per month, which appears to generate less revenue on the surface. However, ad-supported users also contribute advertising revenue through their viewing, so Netflix aims to monetize these users by increasing ad fill rates, ad pricing, delivery efficiency, and viewing time, making the “subscription + ad revenue” model for ad-supported users increasingly close to, or even surpassing, that of ad-free users with high viewing durations.

The More You Watch, the More Valuable You Are—Ad-supported User Value Is Approaching That of Ad-free Users

Netflix’s goal is not to differentiate the experience between “people watching ads” and “people not watching ads,” but to close the revenue gap created by these two user groups. Once the business value of ad-supported users approaches that of ad-free users, Netflix can more confidently raise the price of ad-free plans while retaining price-sensitive users with low-cost ad-supported plans and converting them into ad revenue assets.

According to EDO’s analysis, an ad-supported user paying about $8.99 per month can generate approximately $12.89 in total monthly revenue after 10 hours of viewing; after 20 hours, about $16.79; after approximately 28.5 hours, about $20. At around 41 hours of viewing, this user can generate nearly $25 in monthly revenue, significantly higher than Netflix’s current standard $19.99 ad-free subscription fee.

Krim said this model assumes a CPM, or cost per thousand impressions, of $43, with about nine 30-second ads per hour. He stated, “This data fundamentally changes how streaming networks should evaluate the value of these subscription users.”

Netflix spokesperson Adrian Zamora said, “Building our advertising business remains a primary monetization priority. We expect our ad revenue to reach $3 billion in 2026, representing a more than twofold increase year-over-year.”

“Compared to what people imagine, we are much closer to reaching parity,” said Paul Frampton-Calero, CEO of Goodway Group, a digital marketing agency focused on programmatic media, retail media, and e-commerce. He said that ad-supported subscription users are expected to generate 50% to 75% of the high-end user value in the short term, and may reach or surpass parity over time.

He explained that this is because streaming platforms can combine scale with detailed marketing data about viewing behavior, enabling advertisers to evaluate audiences based on actual engagement rather than broad demographics.

Streaming Approaching the Threshold of Traditional TV—New User Growth Is Being Taken Over by Ad Plans

This model is also being actively driven by consumers, who are increasingly resistant to higher subscription costs.

As consumers resist price hikes more and more, household streaming expenditures are stabilizing, and more subscribers are choosing low-cost ad-supported plans—accounting for about 71% of new subscription growth over the past two years; this also indicates that ad-supported tiers are no longer just low-end substitutes but are the main entry channels for new users into the streaming ecosystem. Streaming is increasingly resembling traditional TV: low-cost entry, ad monetization, scale, and viewing time determine business value.

According to Deloitte’s March 2026 “Digital Media Trends” report, the average household expenditure on streaming subscriptions in the U.S. has remained steady at about $69 per month, and 61% of consumers say they would cancel a service if the price increased by $5. Meanwhile, about 68% of current subscribers use ad-supported plans, reflecting that more and more people are willing to watch ads in exchange for lower prices.

Mary Gabrielyan, Chief Strategy Officer of AI Digital, said that ad-supported plans are no longer just a cheaper alternative. Today, they have become the main way for new users to enter streaming platforms. AI Digital is a media and marketing technology company.

According to data from Antenna’s Q2 2025 “Subscription Status Report,” about 71% of new subscription growth over the past two years came from ad-supported plans. The company, which tracks subscription activity on major U.S. streaming platforms, found that about 65% of these new subscriptions were from new users rather than downgrades from premium plans.

Despite this momentum, premium subscription users are still actively generating more revenue.

“The ultimate goal is to achieve indistinguishability,” said Jessica Reif Ehrlich, senior media and entertainment analyst at Bank of America Securities. “Premium subscribers still have more actual value, but (ad-supported subscription users) are working hard to catch up,” she said. “At some point, streaming platforms and traditional TV will resemble each other, with subscription pricing hitting a ceiling, and growth mainly coming from advertising.”