With Netflix costing $20, the tipping point for streaming cable TV is approaching

Live streaming companies are finding that their most valuable customers may not be the highest paying ones. Instead, more and more viewers are watching.

The shift is being driven from a subscription-only model to one that combines subscription and advertising payments. Because ads are sold based on views, the more time a subscriber spends watching, the more revenue per viewer.

In March, Netflix has raised prices for the second time in just over a year, pushing its regular ad-free plan to around $20 a month, compared to the $9 ad-supported tier, indicating how much a subscriber watches can be worth as much if not more than what they’re paying up front.

“It’s a double payday,” said Kevin Krim, president and CEO of EDO, a company that measures advertising impact across broadcast TV and linear TV. “As long as ad category subscribers are engaging with content and ads, they’re going to be at least as important or higher than ad-free subscribers,” Krim said.

After years of resisting advertising, Netflix is ​​now leaning heavily on that model, rapidly building its own advertising and subscription business. “We’re making good progress, and the opportunity in front of us is huge,” Netflix CEO Greg Peters said after the company’s latest earnings report.

Disney’s Hulu has long combined subscription and advertising revenue, as well Important, The acquisition of Warner Bros again Comcast they have pushed the same strategies across all their broadcast 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 more than 325 million subscribers worldwide, and total viewers watched more than 95 billion hours of content in the first quarter of 2025 alone, providing a much greater opportunity than our competitors to generate advertising revenue over time.

According to Peters, closing the gap between non-advertising and non-advertising subscribers is a major focus for the company. “The gap is narrowing,” and closing it will be “a significant opportunity for future revenue growth,” he said on the company’s recent earnings call.

An increasing number of ad-supported subscribers

Based on EDO’s analysis, an ad-supported subscriber paying about $8.99 per month can generate about $12.89 in total monthly revenue after 10 hours of viewing, $16.79 after 20 hours, and about $20 after 28.5 hours. For about 41 hours of viewing, that subscriber can make roughly $25 a month, significantly more than Netflix’s current $19.99 ad-free subscription.

The model assumes a CPM of $43, or cost per thousand impressions, and about nine 30-second ads per hour, Krim said. “It’s fundamentally changing how broadcast networks have to inform that subscriber,” he said.

“Building our ad business continues to be a top priority for monetization. Our ad revenue is on track to reach $3 billion by 2026, a two-fold increase annually,” said Netflix spokesman Adrian Zamora.

“We’re a lot closer to equality than people think,” said Paul Frampton-Calero, CEO of Goodway Group, a digital marketing agency that specializes in media programming, retail media, and connected commerce. Ad-supported subscribers are on track to generate 50% to 75% of paid user volume in the near term, with the potential to reach or exceed valuation over time, he said.

That’s because streaming platforms can combine scale with detailed data about viewing behavior, allowing advertisers to target audiences based on actual engagement rather than demographics, he said.

The growth of new broadcast subscribers is supported by advertisements

The model is also being driven by consumers who are increasingly resistant to high subscription costs.

According to Deloitte’s March 2026 Digital Media Trends report, the average household’s spending on streaming has remained low at around $69 per month, and 61% of consumers say they will cancel a service if prices increase by $5. At the same time, about 68% of subscribers now use ad-supported categories, which shows a growing willingness to trade ads for lower prices.

Ad-supported programs are not just a cheap alternative. Now, it’s the primary way new users enter streaming platforms, says Mary Gabrielyan, chief strategy officer at communications and marketing technology firm AI Digital.

Over the past two years, nearly 71% of new subscriber growth has come from ad-supported segments, according to Antenna in its Q2’25 Subscriber Status report. The company, which tracks subscription activity across the major US streaming platforms, found that of these, about 65% are new to platforms rather than down to premium plans.

Even with that momentum, premium subscribers still generate more revenue today.

“The ultimate goal is to be neutral,” said Jessica Reif Ehrlich, a news and entertainment analyst for BofA Securities. “Premium subscribers are still very important, though [ad-tier subscribers] they’re going up,” he said. “At some point, the subscription price will hit a wall, and that’s where growth comes from advertising.”