Netflix and Disney+ probably only added ad-tier subscribers this year, says Morgan Stanley
As streaming prices climb, ad-free subscribers are becoming a rarity.
A mass digital migration is taking place, with streaming subscribers leaving their original ad-free tiers as prices climb.
Those subscribers appear to be leaving for greener, louder, more sponsored pastures.
US streaming costs have grown 12% this year, the fourth straight year of double-digit hikes for the top 10 services, according to Convergence Research Group. The hikes appear to be having their intended effect: subscribers are leaving their pricey commercial-free plans behind and switching over to lower-cost, ad-backed subscriptions.
That works out for streamers like Netflix and Disney, since those plans bring the companies more revenue per user despite their lower cost.
The subscriber switchover trend appears to be growing, too. In a note on the entertainment year ahead published on Thursday, Morgan Stanley estimated that cheaper ad-supported streaming subscriptions now make up 30% of Netflix’s subscribers and half of Disney+ subscribers. That’s up from last year’s numbers: 20% for Netflix and 39% for Disney.
The firm also dropped a fascinating tidbit: it believes that ad tiers scored all net additional subscribers for both Netflix and Disney+ this year. The number of subscribers paying for the luxury of no commercials declined. Morgan Stanley wrote:
“Advertising supported streaming has been the primary area of subscriber growth in the past few years, as streamers looked to expand their user base and tap into a more price sensitive customer base. In fact, for both Netflix and Disney Plus, we think it is likely that over 100% of the US net additions in 2025 were through ad-supported tiers, while ad-free subscribers declined.”
This trend could become even more pronounced as streamers’ monetization improves. Morgan Stanley says the revenue streaming services bring in from ads has generally lagged expectations due to surges in inventory as more streamers build out their advertising tiers. As ad tiers become the new normal, that supply-demand calculation will likely even out in their favor.
