In November 2022, Netflix announced the expansion of its Ads Suite to 12 ad-supported countries, including the US, UK, Canada, and others. However, the ad-supported subscription plan is not yet active in India.
Despite these developments, Netflix has maintained that advertising is not its primary revenue model. A large share of its revenue continues to come from subscriptions. It is unlikely that ads will become the company’s main source of income, said Netflix CFO Spencer Neumann.
Netflix said its Ads Suite—its in-house advertising platform—will launch in Europe, the Middle East, and Africa (EMEA) next week. It is currently available in the US and Canada. Music streaming platform Spotify also recently launched its own ad suite.
By controlling its ad tech, Netflix claims it can “deliver newer tools, better measurement, and more creative formats,” said Amy Reinhard, Netflix’s President of Advertising.
Advertisers can access first-party data that matches Netflix’s behavioural insights through the new ad suite. It also said it has opened third-party data access to trusted partners like Experian and Acxiom as part of its efforts to process everything in-house — from the activation of ads to the measurement of metrics.
Netflix’s announcement signals more than just an internal shift—it reflects a broader transformation in the global OTT landscape.
The over-the-top (OTT) landscape is evolving in a way that contradicts the very reasons for its initial popularity—namely, being free of intrusive advertisements. OTT platforms originally offered internet-based, ad-free services with a wide variety of content, allowing users to choose what to watch—unlike traditional cable TV, where individual channels dictate the programming. Now, trends in the OTT market indicate a reversal of the very principles that made these platforms popular.
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Amazon Prime Video also acts as an aggregator. Its ad policy applies to add-on subscriptions available for purchase within the app. This means viewers may still see ads despite subscribing to both Amazon Prime and individual channels like Lionsgate or Mubi. Similarly, AirtelXstream shows ads when users watch Zee5 content through its platform. JioHotstar has long operated on a hybrid ad-supported model.
The common point connecting all three trends above is advertising. The relevance of ads as a subsidiary business model for OTTs is only increasing. This could lead to a rise in subscription costs for ad-free viewing or a wider acceptance of ads as a standard part of the OTT experience. Netflix reported 70 million ad-supported subscribers — up from 40 million the previous year — suggesting strong market traction for ad-based models.
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