Prime Highlights:
- Netflix’s cheaper, ad-supported subscription is starting to pay off, contributing to steady growth in revenue and subscribers.
- Advertising revenue for 2025 exceeded $1.5 billion and is expected to double in 2026, showing strong potential for the future.
Key Facts:
- Netflix’s global subscriber base reached 325 million by the end of 2025, up 23 million from 2024.
- Overall revenue grew 16% in 2025, and net income rose 26%, highlighting strong financial performance.
Background:
Netflix’s ad-supported plan, launched in late 2022, is helping the company grow revenue and subscribers.
During the company’s fourth-quarter earnings call, Co-CEO Greg Peters highlighted the progress of the ad-supported model. “We’re making good progress, and the opportunity ahead of us is massive,” Peters said. Netflix reported that its advertising revenue for 2025 was over $1.5 billion, making up about 3% of its total yearly revenue, and the company expects this to double in 2026.
Netflix’s revenue went up 16% in 2025, and net income increased 26%. By the end of the year, the company had 325 million subscribers worldwide, up 23 million from 2024. For comparison, it added 41 million subscribers in 2024 and almost 30 million in 2023.
Analysts said that although ad revenue was slightly below earlier predictions, the overall growth is still a positive sign. Deutsche Bank analysts said that advertising revenue, though slower to start, is gaining momentum and is likely to contribute significantly to Netflix’s overall growth. Robert Fishman of MoffettNathanson added that the new insights into ad revenue help clarify the company’s overall financial picture.
Netflix’s shift toward an ad-supported model comes amid broader industry trends, where subscription-only streaming is increasingly seen as insufficient for sustainable profitability. Netflix is limiting password sharing and adjusting prices to boost revenue. Peters said ad-supported plans earn less than regular ones, but the gap is shrinking, and the company is improving its ads and technology to make them more effective.
Even though the stock dropped 2% after the earnings report, Netflix’s ad strategy and subscriber growth remain strong, showing the company can compete well in the streaming market.