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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.

12/18/25 1:02PM

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.

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Electronic Arts launches a platform to put more ads in its games

Video game publishing giant EA launched a new platform on Monday designed to make the process of selling immersive ad space in its popular games easier.

The company says the platform, called EA Advertising, allows brands to “integrate directly into gameplay through dynamic, real-time placements, from stadium signage to custom in-game content.”

More so than other studios, EA has incorporated advertising into its most popular titles. As Kotaku points out, the company’s ad efforts stretch as far back as 2006. Several of its sports franchises already feature partnerships with brands like Visa, Lowe’s, Red Bull, and PepsiCo.

In-game advertising hasn’t exactly been embraced by fans, but industry experts expect it to ramp up as companies seek more revenue to offset higher games budgets and surging memory costs. EA rival Take-Two has taken a different approach, with CEO Strauss Zelnick recently saying the company was “not at risk of doing brand partnerships” in the forthcoming “Grand Theft Auto VI,” and that ads in full-price games seems “unfair.”

The $55 billion deal to take EA private, led by Saudi Arabia’s Public Investment Fund, is set to close at the end of this month. Being the largest leveraged buyout in history, EA will likely look for more ways to boost revenue to cover interest payments.

Electronic Arts Makes Push for Ad Dollars Tied to Sports

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JM Smucker says it sold $1 billion worth of Uncrustables in FY2026

After years of booming sandwich sales, JM Smucker has finally earned a billion-dollar crust.

On Tuesday, the company reported results for fiscal year 2026, highlighting better-than-expected profits driven by higher prices for coffee and sweet baked goods. However, at another point on the earnings call, CEO Mark Smucker pointed to one particularly jammy figure: in line with previous forecasts, the company sold $1 billion worth of its (almost always) crustless sandwiches, Uncrustables, in the last year alone.

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Paramount reportedly offers concessions to resolve multistate antitrust investigation

Paramount has reportedly offered up some concessions in an effort to prevent an antitrust lawsuit by California and about 10 other states, according to Bloomberg reporting on Monday.

Reuters first reported on the potential suit from a group of unnamed states last week, which could throw a wrench in Paramount’s plans to buy rival Warner Bros. Discovery in a Hollywood megamerger.

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

Paramount Offers Concessions to Head Off State Antitrust Lawsuit

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

$98B ⛽

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The IATA released its latest financial outlook for the airline industry over the weekend, forecasting a $98 billion jump in the sector’s collective fuel bill. The world’s largest trade group representing airlines expects the oil spike to halve profits by 49% from last year to $23 billion.

The group also expects profit margins to halve year over year, falling from 2025’s 4.2% to 2%. Still, revenue is expected to climb to $1.17 trillion from $1.07 trillion.

A surge in the cost of jet fuel has rocked US and global airlines this year, leading Delta Air Lines, United Airlines, American Airlines, Southwest Airlines, JetBlue, and others to raise fares and ancillary charges like bag fees. Low-cost carriers, which operate on smaller margins, have been squeezed the hardest, resulting in Spirit’s shutdown.

“It’s a tough year for all airlines, especially those whose balance sheets had not yet recovered from COVID. And, of course, for those operating in the Gulf,” said IATA Director General Willie Walsh, who added that demand is holding up and about half of passengers expect to spend more on travel this year. “That bodes well for a strong northern summer peak season. The big unknown is how long travelers and shippers can tolerate the higher costs of connectivity.”

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