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Netflix Expands Ad Business: Is it the Next Revenue Pillar?
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Key Takeaways
NFLX launched its in-house ad tech, Netflix Ads Suite, to offer personalized, low-load ad experiences.
New partnerships with DV360, The Trade Desk and Yahoo DSP aim to simplify Netflix ad buying.
NFLX expects ad revenues to double by fiscal 2025 and reach $9 billion by the end of fiscal 2030.
Netflix’s (NFLX - Free Report) advertising business has been gaining momentum with the launch of its proprietary in-house ad-tech platform, the Netflix Ads Suite. This supply-side platform offers advertisers greater control with personalized ads and provides subscribers with a low ad load of four minutes per hour, less than competitors like Hulu. It also features smarter ad placement based on viewer behavior rather than content type. The availability of the Netflix Ads Suite in the United States and Canada, EMEA and other ad-supported countries is a major driver.
To simplify the ad-buying process for advertisers, Netflix has partnered with leading platforms like Google’s DV360 and The Trade Desk. These partnerships are expected to provide easier access to land upfront deals. The company also recently inked a partnership deal with Yahoo DSP that will enable clients to buy Netflix advertising through Yahoo programmatically. This service will be available later this year across all 12 of Netflix’s ad-supported countries.
Netflix’s ad-supported plan is currently used by 94 million people and is hugely popular among 18 to 34-year-olds. In the United States, ad-plan members spend an average of 41 hours monthly on Netflix. The company expects ad revenues to double by the end of fiscal 2025 and reach more than $9 billion by fiscal 2030.
NFLX Faces Stiff Competition in Ad Domain
NFLX’s nascent advertising segment operates in a highly competitive industry and faces stiff competition from Amazon (AMZN - Free Report) and Disney (DIS - Free Report) .
Amazon’s ad business grew 19% year over year to $13.9 billion in the first quarter of 2025, primarily due to demand across Prime Video, Twitch, IMDb and Live Sports. With an average of 275 million ad-supported audiences in the United States alone, Amazon boosts performance through audience targeting, clean rooms and measurement tools. AMZN also provides advertisers with software to analyze customer data and generate relevant performance metrics.
Disney, on the other hand, has built up a massive global audience for its ad-supported streaming content. It has an estimated 157 million active users worldwide, 112 million of whom are of Disney’s streaming platforms in the United States. These users, as reported by Disney, were engaged with ads for at least 10 seconds over the past six months on viewing platforms such as Disney+, Hulu and ESPN+.
NFLX’s Share Price Performance, Valuation and Estimates
From a valuation standpoint, Netflix trades at a premium, with a forward 12-month P/S ratio of 11.36X compared with the broader Zacks Broadcast Radio and Television industry’s forward earnings of 4.12X. DIS has a Value Score of D.
NFLX Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $44.47 billion, indicating 14.01% year-over-year growth. The consensus mark for earnings is pegged at $25.32 per share, down by a penny over the past 60 days. This indicates a 27.69% increase from the previous year.
Image: Bigstock
Netflix Expands Ad Business: Is it the Next Revenue Pillar?
Key Takeaways
Netflix’s (NFLX - Free Report) advertising business has been gaining momentum with the launch of its proprietary in-house ad-tech platform, the Netflix Ads Suite. This supply-side platform offers advertisers greater control with personalized ads and provides subscribers with a low ad load of four minutes per hour, less than competitors like Hulu. It also features smarter ad placement based on viewer behavior rather than content type. The availability of the Netflix Ads Suite in the United States and Canada, EMEA and other ad-supported countries is a major driver.
To simplify the ad-buying process for advertisers, Netflix has partnered with leading platforms like Google’s DV360 and The Trade Desk. These partnerships are expected to provide easier access to land upfront deals. The company also recently inked a partnership deal with Yahoo DSP that will enable clients to buy Netflix advertising through Yahoo programmatically. This service will be available later this year across all 12 of Netflix’s ad-supported countries.
Netflix’s ad-supported plan is currently used by 94 million people and is hugely popular among 18 to 34-year-olds. In the United States, ad-plan members spend an average of 41 hours monthly on Netflix. The company expects ad revenues to double by the end of fiscal 2025 and reach more than $9 billion by fiscal 2030.
NFLX Faces Stiff Competition in Ad Domain
NFLX’s nascent advertising segment operates in a highly competitive industry and faces stiff competition from Amazon (AMZN - Free Report) and Disney (DIS - Free Report) .
Amazon’s ad business grew 19% year over year to $13.9 billion in the first quarter of 2025, primarily due to demand across Prime Video, Twitch, IMDb and Live Sports. With an average of 275 million ad-supported audiences in the United States alone, Amazon boosts performance through audience targeting, clean rooms and measurement tools. AMZN also provides advertisers with software to analyze customer data and generate relevant performance metrics.
Disney, on the other hand, has built up a massive global audience for its ad-supported streaming content. It has an estimated 157 million active users worldwide, 112 million of whom are of Disney’s streaming platforms in the United States. These users, as reported by Disney, were engaged with ads for at least 10 seconds over the past six months on viewing platforms such as Disney+, Hulu and ESPN+.
NFLX’s Share Price Performance, Valuation and Estimates
NFLX shares have gained 43.6% year to date (YTD), outperforming both the Zacks Consumer Discretionary sector’s growth of 6.5%, as well as the Zacks Broadcast Radio and Television industry, which rose 29.5%.
NFLX YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Netflix trades at a premium, with a forward 12-month P/S ratio of 11.36X compared with the broader Zacks Broadcast Radio and Television industry’s forward earnings of 4.12X. DIS has a Value Score of D.
NFLX Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $44.47 billion, indicating 14.01% year-over-year growth. The consensus mark for earnings is pegged at $25.32 per share, down by a penny over the past 60 days. This indicates a 27.69% increase from the previous year.
Image Source: Zacks Investment Research
NFLX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.