The Netflix ad tier now commands 94 million global monthly active users, a significant milestone highlighting the success of its advertising-supported model. Alongside this user growth, Netflix announced major ad tech advancements, including the development of its own ad platform and plans to introduce generative AI-powered advertisements by 2026, signaling a strategic deepening of its advertising business.
SAN FRANCISCO, CA – Netflix has achieved a critical mass with its Netflix ad tier, announcing that the service now engages 94 million global monthly active users (MAUs). This figure, revealed during the company’s recent Upfront presentation, not only signifies substantial growth for its ad-supported offering but also sets the stage for Netflix’s next phase in advertising: the launch of a proprietary ad technology platform and the introduction of innovative ad formats, including generative AI ads.
The growth trajectory of the Netflix ad tier has been remarkably steep. From 5 million MAUs in May 2023 to 23 million in January 2024, and 40 million reported earlier in 2025, the leap to 94 million demonstrates robust market adoption. According to Netflix, the ad plan constitutes over 30% of its total subscriber base in the 12 markets where it’s available, with nearly half of all new subscribers in these regions opting for the ad-supported version. This user adoption is crucial as it provides the scale necessary for Netflix to build a formidable advertising business. The strategic use of AI to enhance user engagement and platform capabilities is a trend seen across the tech industry, including OpenAI’s efforts to improve AI safety and transparency.
Building an Ad Tech Powerhouse: The Netflix Ad Tier Strategy
A key component of Netflix’s evolving advertising strategy is the development of its own in-house ad technology platform. The company plans to transition away from its current ad tech partnership with Microsoft, with the new proprietary platform slated for a U.S. launch by the end of 2025 and a full global rollout targeted for the second quarter of 2026. This move will grant Netflix greater control over its ad inventory, data management, targeting precision, and the overall ad experience. Building an in-house ad tech stack is a complex undertaking but offers significant long-term advantages in terms of customization, efficiency, and innovation. This mirrors how other tech companies leverage their infrastructure, such as Google’s development of Gemini AI for various applications.
The future of advertising on the Netflix ad tier also includes a foray into cutting-edge ad formats. Netflix’s President of Advertising, Amy Reinhard, detailed plans to introduce generative AI-powered ads by mid-2026. While the exact mechanics of these AI ads were not fully elaborated, the term “generative AI” suggests advertisements that could be dynamically created, modified, or personalized at scale, potentially leveraging viewer data and content context to an unprecedented degree. This could involve variations in ad creative, messaging, or even interactive elements tailored to individual user profiles or viewing sessions. The application of generative AI in advertising is an emerging field with significant potential to disrupt traditional ad creation and delivery processes. The ethical implications and technical execution of such AI ads will be closely watched, especially concerning user privacy and the potential for manipulative advertising. This push into AI advertising aligns with broader industry trends, where AI is being used to create more dynamic content, such as with TikTok’s “Alive” images.
In addition to AI-driven ads, Netflix is exploring other novel ad units. “Title card” or “squeeze-back” ads, which would appear during content transitions or pauses, aim to provide less intrusive ad placements. The company is also developing shoppable and interactive ad formats, enabling direct consumer engagement and potential e-commerce integrations within the streaming experience. These innovations are part of Netflix’s broader effort to make advertising a more integrated and potentially value-added component of the Netflix ad tier, rather than just a tolerated interruption. The development of new user interfaces and interactive features is a constant in the tech world, as seen with Apple’s reported work on advanced smart glasses.
From a business perspective, these announcements signal Netflix’s serious commitment to growing its advertising revenue stream into a major contributor to its overall financial health. By investing in its own ad tech and pioneering new ad formats, Netflix is aiming to offer a premium advertising environment that can command higher CPMs (cost per mille) from brands. The company is also bolstering its measurement capabilities through partnerships with established third-party firms like Nielsen, EDO, and iSpot, providing advertisers with the data and analytics they require to justify their ad spend. Such data-driven approaches are crucial in the advertising ecosystem, much like how data analysis is key in AI’s application in fields like drug discovery.
The technical challenges associated with these ambitions are considerable. Building a global ad tech platform that can handle the scale of Netflix’s audience and the complexity of advanced ad formats like generative AI ads requires significant engineering resources and expertise. Ensuring data privacy, adhering to diverse international regulations, and preventing ad fraud will also be critical undertakings. Moreover, the success of the Netflix ad tier will hinge on the company’s ability to balance monetization with user experience. If the ad load becomes too heavy or the AI-driven personalization feels overly intrusive, it could lead to subscriber churn, undermining the growth that has been so impressive to date. The responsible deployment of AI is a major concern across industries, as evidenced by the controversy surrounding Billie Eilish AI fakes and the misuse of AI for creating synthetic media.
Ultimately, Netflix’s announcements underscore a strategic pivot towards a hybrid business model where advertising plays an increasingly vital role. The rapid growth of the Netflix ad tier to 94 million MAUs provides a strong foundation for this strategy, and the planned advancements in ad technology and formats demonstrate a clear ambition to become a major player in the digital advertising landscape.
