With Netflix new ad-free standard plan at $20, streaming's tipping point into old TV is getting closer

LivestreamMenuMake ItselectUSAINTLLivestreamSearch quotes, news & videosLivestreamWatchlistSIGN INCreate free accountMarketsBusinessInvestingTechPoliticsVideoWatchlistInvesting ClubPROLivestreamMenu To learn more about the CNBC CFO Council, visit cnbccouncils.com/cfo Streaming companies are discovering that their most valuable customers may not be the ones paying the most. Instead, it's increasingly the viewers who watch the most. The change is being driven by a move away from a subscription-only model to one that combines subscription fees with advertising. Because ads are sold based on viewership, the more time a subscriber spends watching, the more revenue that viewer generates. In March, Netflix raised prices for the second time in just over a year, pushing its standard ad-free plan to around $20 a month, versus an ad-supported tier at $9, signaling that how much a subscriber watches may matter as much if not more than what they pay upfront. "It's a double payday," said Kevin Krim, president and CEO of EDO, a company that measures the impact of advertising across streaming and linear TV. "As long as the ad-tier subscriber is engaged with the content and the ads, they will be at least as valuable or more than ad-free subscribers," Krim said. After years of resisting advertising, Netflix is now leaning heavily into that model, rapidly building out its advertising business alongside subscriptions. "We're making good progress, and the opportunity ahead of us is massive," Netflix co-CEO Greg Peters said after the company's latest earnings report. Disney's Hulu has long combined subscription and advertising revenue, and Paramount, Warner Bros. Discovery and Comcast have pushed similar strategies across their streaming platforms. Netflix's advantage, however, comes from both its scale and how much its audience watches. According to the company's Q4 2025 shareholder update, it has over 325 million subscribers globally, and viewers collectively watched more than 95 billion hours of content in the first half of 2025 alone, providing far more opportunity than competitors to generate advertising revenue over time. According to Peters, closing the gap between ad-free and ad-tier subscribers is a major focus for the company. The "gap is narrowing," and closing it will be a "key opportunity for future revenue growth," he said on the company's recent earnings call. Based on EDO's analysis, an ad-supported subscriber paying roughly $8.99 a month can generate about $12.89 in total monthly revenue after 10 hours of viewing, $16.79 after 20 hours, and roughly $20 after about 28.5 hours. At about 41 hours of viewing, that subscriber can generate nearly $25 in monthly revenue, notably more than the now standard $19.99 ad-free Netflix subscription. The model assumes a $43 CPM, or cost per thousand impressions, and about nine 30-second ads per hour, said Krim. "It fundamentally changes how streaming networks should value that subscriber," he said. "Building out our ads business continues to be a major monetization priority. Our advertising revenue remains on track to reach $3 billion in 2026, up 2x year-over-year," said Netflix spokesperson Adrian Zamora. "We're getting much closer to parity than people think," said Paul Frampton-Calero, CEO of Goodway Group, a digital marketing agency specializing in programmatic media, retail media, and connected commerce. Ad-supported subscribers are on track to generate 50% to 75% of the value of a premium user in the near term, with the potential to reach or exceed parity over time, he said. That's because streaming platforms can combine scale with detailed data on viewing behavior, allowing advertisers to value audiences based on actual engagement rather than broad demographics, he said. The model is also being driven by consumers who are increasingly resistant to higher subscription costs. According to Deloitte's March 2026 Digital Media Trends report, average household spending on streaming has remained flat at about $69 per month, while 61% of consumers say they would cancel a service if prices increased by $5. At the same time, about 68% of subscribers now use ad-supported tiers, reflecting a growing willingness to trade ads for lower prices. Ad-supported plans are not just a cheaper alternative. Now, they are the primary way new users enter streaming platforms, said Mary Gabrielyan, chief strategy officer at media and marketing technology company AI digital. Over the past two years, about 71% of new subscriber growth came from ad-supported tiers, according to Antenna in its Q2'25 State of Subscriptions Report. The company, which tracks subscription activity across major U.S. streaming platforms, found that of these, roughly 65% are new to platforms rather than downgrading from premium plans. Even with that momentum, premium subscribers still generate more revenue today. "The goal is ultimately to be indifferent," said Jessica Reif Ehrlich, senior media and entert

With Netflix new ad-free standard plan at $20, streaming's tipping point into old TV is getting closer

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