A different kind of Netflix ad: a billboard for ’Beverly Hills Cop: Axel F' (Beata Zawrzel/NurPhoto via Getty Images)

Adding Down?

Netflix's ads tier is growing but it's not the savior the company hoped for — yet

Last year they were telling a different story about ads profitability.

7/19/24 10:24AM

A year ago, Netflix said it was making more money from ads subscriptions than the more expensive ad-free options. During 2023’s Q2 earnings call, Chief Financial Officer Spence Neumann said, “Our overall ads ARM continues to be higher than basic ad free globally,” referring to average revenue per membership, which is a combination of the subscription fee and ads revenue.

That seems to have changed. “Currently our ads ARM is lower than our non-ads ARM,” Co-CEO Greg Peters said on the earnings call yesterday.

What happened?

“Currently because we've been scaling so rapidly, we're racing behind essentially to fulfill all of that increasing inventory. And we're lagging in that regard,” Peters said.

In other words, it seems people are signing up for the ads tier so quickly, Netflix has more room to show ads than it has deals with advertisers or the ad tech is not good enough to meet this increased demand, meaning they are not able to effectively monetize all these new views with ads.

“We're on track to achieve our critical scale goals for all of our ads countries in 2025,” he said.

“We're adding more sales folks. We're adding more ads operation folks, building our capabilities to meet advertisers. A big component of that is giving advertisers more effective ways to buy Netflix.”

Netflix already appears to be shaking up its ad team. Yesterday, media industry vet Peter Naylor became the second of two senior executives to leave the ad team.

Netflix introduced its lower cost ads tier in limited markets a year and half ago. In May the company said its ad-supported tier had 40 million global subscribers, or almost double what it was in January. That meant ads subscribers represented about 15% of all subscriptions.

Netflix reported that this quarter its ads tier grew 34% from last quarter, but didn’t say how many subscribers that was. It did say a full 45% of new signups in ads markets was for the ad tier last quarter, growing from 40% in Q1.

For now, Neumann called ads a “meaningful contributor” to the streaming company’s revenue.

“When you get into 2026 and beyond, it can be even more meaningful, and hopefully it becomes the point where it is a primary contributor given all that engagement and reach that we're building,” he said.

Rani Molla10h

Amazon raises the price for ad-free Prime Video to $4.99

Amazon is giving consumers more — for more. The e-commerce giant is raising the price of its ad-free Prime Video tier to $4.99 a month, up from $2.99.

On April 10, the service, now rebranded as Prime Video Ultra, will allow more concurrent streams (five instead of three) and up to 100 downloads, up from 25. Ad-free Prime Video had been included with a Prime membership until 2024, when Amazon added ads and began charging $2.99 a month to remove them.

For what it’s worth, ad-free Prime Video is still cheaper than the other increasingly expensive streaming services — if you don’t include the cost of Prime.

Prime Video’s Ad Free subscription becomes Prime Video Ultra for $4.99 a month

For what it’s worth, ad-free Prime Video is still cheaper than the other increasingly expensive streaming services — if you don’t include the cost of Prime.

Jon Keegan

12h

Most Americans have heard about data centers — the more they learn, the more negative their views

A major survey by Pew gives us a good look at how Americans are thinking about data centers as they start popping up in communities across the US.

Rani Molla13h

Uber relaunches robotaxi service with Hyundai-backed Motional in Las Vegas

What happens in Vegas, keeps happening in Vegas.

Uber users in Las Vegas can now be matched with an electric Motional IONIQ 5 robotaxi along parts of the Strip and at select casinos, resorts, and the Town Square shopping district near the airport, the companies said. For now, each vehicle includes a human safety operator monitoring from behind the wheel, who the companies say will be removed by year’s end.

Uber and Hyundai-backed autonomous tech company Motional previously tested a service there in 2022. “Motional is ready to put our extensive ride hail experience to work with Uber again,” said David Carroll, vice president of commercialization at Motional, which paused its commercial deployments in 2024 to refocus on its core driverless technology after scaling back operations.

This time around, the companies will be joining a much more crowded field. Amazon-owned Zoox has been offering free rides along select destinations on the Strip since last year, and both Tesla’s Robotaxi and Alphabet-owned Waymo have plans to open up shop there in the near future.

Thanks to a spate of recent AV partnerships, Uber, which sold its own autonomous unit back in 2020, is finding itself at the center of the nascent robotaxi boom.

Rani Molla14h

Musk says “xAI was not built right” amid executive departures, Cursor hires

There’s been a lot of turnover lately at xAI, with numerous executive departures and, yesterday, news that the SpaceX-owned company was hiring two senior leaders from Cursor, an AI coding startup that’s raising funds at a $50 billion valuation.

The reason? “xAI was not built right first time around, so is being rebuilt from the foundations up,” CEO Elon Musk posted on xAI-owned X yesterday, in response to a post about the Cursor hires. Earlier this month, Musk told a conference audience, “Grok is currently behind on coding.”

The news amounts to an admission of a reset inside xAI and an acknowledgment that the company is trailing AI peers like Anthropic and OpenAI in one of AI’s most commercially important applications: coding.

xAI was not built right first time around, so is being rebuilt from the foundations up.

Same thing happened with Tesla.
— Elon Musk (@elonmusk) March 12, 2026

Jon Keegan15h

War in the Middle East halts Meta’s undersea fiber project

Meta’s massive undersea cable project connecting Africa and the Middle East to Europe has run into an unexpected obstacle — not under the sea, but in the sky and land above: the war in the Middle East.

According to a report from Bloomberg, France’s Alcatel Submarine Networks, the company that is laying the cable, notified customers that it can no longer safely operate in the area.

The 2Africa project consists of a 45,000-kilometer chain of undersea fiber-optic cables that encircles Africa and runs through the Red Sea, up through the Gulf of Oman, where the Strait of Hormuz sits. Iran has declared the strait — a crucial choke point for oil and natural gas tankers — closed for traffic.

Meta is building the network in partnership with Bayobab, China Mobile, Orange, Telecom Egypt, Vodafone, WIOCC, and Center3.

Big Tech’s most important infrastructure is at the bottom of the sea