Netflix feels comfortable raising prices knowing customers can downgrade to its ad tier; in 2026, Netflix is on track to double 2025's $1.5B+ in ad sales
The most popular Netflix plan will now cost $20 a month — a 150% increase from 2013 — Good afternoon from Los Angeles and happy baseball season to those of you who celebrate.
Context & Ripple Effects
Netflix’s latest increase extends a long-running price-reset cycle: its popular plan was raised to $10 for new customers in 2015, and the company made further US increases in 2023 and 2025. The recent US price changes across both ad-free and ad-supported plans show that the ad tier is not merely a low-price acquisition product; it is part of the company’s ongoing tier structure.
The key change in this arc is that a lower-priced, ad-supported option gives Netflix a place to retain price-sensitive households when ad-free pricing rises. With 2026 ad sales reportedly tracking toward roughly twice 2025’s more-than-$1.5 billion level, downgrades can produce advertising inventory as well as subscription revenue.
First-order effects
- Ad-free Netflix customers face a higher monthly bill and can respond by paying more, changing plans, or moving to the ad-supported tier; Netflix preserves a lower-cost retention path while lifting the price ceiling.
- A larger ad-tier audience would expand Netflix’s sellable ad inventory, supporting the reported acceleration in advertising sales.
Second-order effects
- Netflix can tolerate some cannibalization of ad-free subscriptions if lower-tier retention and advertising revenue offset it—a sharper version of the 2025 increase that also raised the ad plan’s price.
- Other subscription video services with ad tiers will face a clearer pricing benchmark: a low-cost ad plan can function as an off-ramp from premium tiers rather than simply a discount product.
Third-order effects
- If this model continues to work, streaming pricing may increasingly be organized around managed migration between premium and ad-supported tiers, rather than a binary choice between subscription growth and churn.
- The longer-term trade-off is visible in Netflix’s earlier premium-price increases: platforms can raise average revenue while making ad delivery, measurement, and advertiser demand more central to the subscription business.
The trend: Streaming services are turning ad-supported plans into a revenue-and-retention buffer that makes repeated ad-free price increases more sustainable.