LOS GATOS, California — When Netflix first announced it would introduce an advertising-supported tier in late 2022, the decision was greeted with a mixture of skepticism and schadenfreude. The company that had built its brand on the promise of ad-free viewing — "Netflix and chill" was never meant to be interrupted by a car commercial — was being forced to compromise, the narrative went. Four years later, that "compromise" has become one of the most successful advertising businesses in media history.

Netflix's ad-supported tier reached 100 million monthly active users in Q2 2026, a milestone the company disclosed during its most recent earnings call. Those 100 million subscribers are generating an estimated $8 billion in annual advertising revenue, a figure that places Netflix's ad business on par with the commercial operations of major broadcast networks. The ad tier's average revenue per user — combining the lower subscription fee with advertising revenue — now exceeds that of the standard ad-free tier in several markets, including the United States.

"We didn't build the ad business because we had to," co-CEO Greg Peters said on the earnings call. "We built it because the economics of giving consumers a lower price point while offering advertisers access to an engaged, logged-in audience at scale were too compelling to ignore." The ad tier's success has already begun reshaping Netflix's content strategy. Live sports, which the company long insisted it would never pursue, now represent 15% of the content budget. Advertising dollars require appointment viewing and broad appeal — two things that prestige limited series, Netflix's original calling card, do not reliably deliver.