Morgan Stanley: ad tiers account for 30% of Netflix subscribers and 50% of Disney+ subscribers; ad tiers accounted for all US net subscriber additions in 2025
As streaming prices climb, ad-free subscribers are becoming a rarity. — A mass digital migration is taking place …
Context & Ripple Effects
Streaming’s ad-supported shift has been building for years: ad tiers across major services had already passed 100M US users collectively in 2023, while Netflix said its ad plan represented more than 45% of signups in markets where it was offered by mid-2024.
Netflix subsequently reported 94M monthly active users on its ad-supported plan, making Morgan Stanley’s subscriber-mix estimate a sign that the lower-priced option is no longer merely an acquisition tool but central to the services’ customer bases.
First-order effects
- Netflix and Disney+ are increasingly serving new US customers through ad-supported plans, while ad-free plans become a smaller share of incremental growth.
- The reported mix gives both services a larger ad-supported audience to monetize alongside subscription revenue.
Second-order effects
- Streaming rivals seeking US subscriber growth face stronger pressure to make their own lower-priced ad tiers competitive on price, inventory, and viewing experience.
- Advertisers gain more reason to treat premium streaming as a core video-buying channel as the addressable audiences on Netflix and Disney+ expand.
Third-order effects
- If this mix persists, streaming economics will shift further from a single subscription price toward segmented pricing that trades lower consumer fees for advertising revenue.
- The outcome increases the importance of ad sales and measurement capabilities in a sector once organized primarily around subscriber counts; whether that offsets slower premium-tier growth will depend on ad demand and execution.
The trend: Streaming is evolving into a hybrid paid-media market in which ad-supported plans supply customer growth and advertising becomes integral to platform monetization.