Netflix’s lower-cost subscription is increasing in price, with more ads.

Netflix recently announced an increase in subscription prices for both its ad-free and ad-supported tiers in their latest earnings report. This change means that customers opting for the cheaper ad-supported service will need to pay more to watch more ads.

Co-CEO Gregory Peters mentioned during the earnings call that the company is focusing on improving the offering for advertisers to increase monetization of the growing advertising inventory. He emphasized that this would continue to be a priority for Netflix for the next several years and likely beyond that. This could potentially mean that the company might charge advertisers more for serving additional ads, although it is not entirely clear.

Netflix launched its ad service in late 2022 and exceeded its ad revenue target last quarter. Peters shared that the company doubled ad revenue in 2024 compared to 2023 and is expecting to double it again this year. This growth in ad revenue indicates a positive trajectory for Netflix in the advertising space.

According to a report by Jon Keegan from Sherwood News, Netflix currently has the lowest percentage of ads per program compared to its competitors. This could be attributed to the fact that the company has not fully scaled its relatively new ad service, rather than a deliberate choice to feature fewer ads.

The increase in subscription prices for Netflix’s ad-supported service comes at a time when the company is experiencing significant growth and success in the advertising sector. By focusing on enhancing the offering for advertisers and increasing monetization opportunities, Netflix aims to capitalize on the growing advertising inventory on its platform.

Overall, Netflix’s decision to raise subscription prices for its ad-supported tier reflects the company’s strategy to leverage its advertising business for sustainable growth and increased revenue. As the company continues to expand its ad service and optimize monetization opportunities, customers can expect to see more ads on the platform in the future.