Netflix’s ad-supported subscription is on fire. In May 2024, the streamer had about 40 million subscribers on its budget-friendly, ad-inclusive plan. Fast forward a year later, and that number more than doubled to 94 million worldwide. It’s clear that folks love the lower price tag, even if it means watching a few commercials.
Viewers aren’t just agreeing to ads—they’re actually paying attention. Netflix’s ad boss recently pointed out that users “treat those interstitial commercials with nearly the same focus they give to their favorite shows.” That level of engagement is music to the ears of any advertiser, and Netflix is quickly ramping up its ad offerings to match the demand.
Upcoming Ad Formats
Later this year, expect to see commercials pop up in places you haven’t encountered before. Netflix plans to beef up the ad volume on its standard slots, but it’s also testing new formats like mid-roll placements when you pause a show. Picture this: you hit pause on a thriller, and—bam—a 10-second preview for the latest soda or car model shows up before you resume.
Even more bold are the planned overlay banners. These will layer small, unobtrusive ads at the bottom of the screen while your show plays. It’s a classic on-screen banner ad, but tailored for a streaming environment. Netflix is rolling out these features in the U.S. first and then plans to expand to a dozen more countries in the coming months.
Enter AI-Generated Advertisements
Perhaps the most intriguing twist is Netflix’s plan to weave in AI-generated ads. During a recent media conference, the company hinted that some commercials will be dynamically created on the fly using artificial intelligence. The goal? To blend an advertiser’s message seamlessly with the mood and visuals of Netflix content.
Imagine watching Mad Max’s desert wasteland and, suddenly, an AI-crafted Coca-Cola banner appears, perfectly color-matched and stylized to fit the post-apocalyptic vibe. Netflix says this approach will “marry our advertisers’ branding with the worlds we create for our subscribers,” offering a fresh, immersive ad experience that might feel more like part of the story than an interruption.
Impacts on Viewers and Revenue
For viewers, the cheaper plan comes at a clear cost: more ads. On average, subscribers spend about 41 hours per month on Netflix, and roughly half of all new sign-ups now choose the ad-supported tier. With more eyeballs on commercials, Netflix expects to double its ad revenue in the next year.
That shift also changes the dynamic between ad-free and ad-supported tiers. The ad-free standard plan is almost twice as expensive as the version with commercials, making it less accessible for budget-conscious customers. Over time, that price gap means a growing number of viewers will have little choice but to embrace ads if they want to keep their monthly bill low.
What’s Next for Netflix and Its Subscribers?
It’s safe to say Netflix is betting big on ads—especially those generated by AI. While purists might miss uninterrupted binge sessions, others will appreciate the steep discount. And if Netflix pulls off those smart, content-aware AI ads without feeling too intrusive, it could set a new standard for streaming advertising.
Whether you love or loathe the idea of AI-driven commercials, one thing’s for sure: Netflix’s ad game is only getting stronger. So grab your popcorn—and maybe a soda—and get ready for a whole new layer of advertising innovation that just might feel more like part of the show than a break from it.
