- Content: 
By Gavin Boyle
Two years after ad-supported streaming became the norm with the major streamers, the cheaper option is now saving consumers over $500 per year.
“We’ve left a big consumer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’” Netflix co-CEO Ted Sarandos said in October of 2022 when the company announced it would be launching an ad-supported subscription tier.
This opened the floodgates for others in the industry to follow suit, and now every major service, apart from Apple TV+, provides an ad-supported option which comes at a cheaper price. The introduction of this option has proven to be extremely successful as platforms like Netflix are adding millions of new users through the tier. In 2024 alone, the ad-supported tier on Netflix grew by 41 millions subscribers, setting the platform up to generate $6 billion annually through ads by 2027, per MoffettNathanson.
As streaming continues to become more expensive, the draw to ad-supported tiers is no surprise as consumers look for ways to save costs while also maintaining access to their favorite shows and movies. On Netflix, for example, consumers save $120 per year through the ad-tier, while Hulu subscribers save $108 per year.
While these savings are no-brainers for many consumers, they do not take money out of streamers’ pockets either as the companies more than make up the reduced subscription price through ad revenue. In 2025, the streaming industry is predicted to receive just under 20% of all ad spending — which is expected to top $1 trillion for the first time.
Beyond providing access to a library at a lower cost, ad-supported streaming is also beneficial for consumers as it rewards the companies that produce consistent, high-quality content by directly increasing their ad revenue as a result. This is compared to the streaming business model before, which only received its revenue once a month when consumers decided to stay subscribed to the service, rather than based on how many hours they actually used the product.
Related: ‘Just Getting Started’: Netflix Reaches 70 Million Users on Ad-Supported Tier
Furthermore, ad-tiers also allow streamers to bundle their service, as they can recover the profit lost by offering access to their library at a discount.
“We have found that when you bundle together with other content that more people in the family like – on a very basic level – the more often you watch product, the more people in the family that watch the product, the lower the churn,” said Warner Bros. Discovery CEO David Zaslav after Max bundled with Disney+.
While streaming may be moving away from its golden age of offering never-before-seen library sizes for dollars a year, ad-tiers are allowing the service to remain affordable while being beneficial for the companies as well.
Read Next: Everything You Need to Know About Streaming Bundles
- Content: +4Share:
- Content: +1