Netflix just crossed from advertising experimentation into scaled business reality. The streaming giant's ad-supported tier hit 94 million monthly users and generated $1.5 billion in revenue through 2025—double 2024's figure—signaling that ads have moved from defensive necessity to structural revenue engine. Greg Peters' confidence on the earnings call about doubling again to $3 billion in 2026 marks the moment when Netflix's leadership stops protecting subscription revenue and fully commits to a dual monetization model. For investors, advertisers, and competing streamers, this inflection changes everything about how streaming profitability works.

Netflix just proved something streaming executives have been debating for years: advertising isn't a revenue cliff-edge for subscription services. It's an accelerant.

The numbers tell the story. Greg Peters announced on Tuesday that Netflix's advertising business doubled from roughly $750 million in 2024 to $1.5 billion in 2025. More significantly, he committed to the market that 2026 will see another doubling to approximately $3 billion. This isn't cautious guidance. This is a company saying the opportunity ahead is massive.

That confidence rests on something tangible: 94 million monthly active users on Netflix's $7.99 ad-supported tier as of mid-2025. That's not a rounding error. That's a user base larger than most streaming platforms' total subscriber counts. With those users generating real CPM revenue at scale, Netflix has moved past the phase where ads were an experiment that might cannibalize premium subscriptions. They've proven ads accelerate overall platform monetization instead.

The path here matters for understanding what's shifting. Two years ago, Netflix's ad tier was a defensive play—a way to capture price-sensitive users who might otherwise cancel. The company proceeded cautiously, worried about subscription erosion. That concern proved unfounded. The ad tier grew. Premium subscribers stayed. And suddenly, ads became a lever the company could actually pull harder.

Now, Netflix is pulling it deliberately. The company plans to roll out interactive video ads in Q2 2026 and is already deploying AI-powered tools that let advertisers blend their messages into scenes from Netflix shows and movies. These aren't pre-roll ads—they're integrated experiences that feel native to the platform. That's a different competitive posture than YouTube or Meta's approach to advertising. Netflix is betting on format innovation rather than volume scaling.

For advertisers, this matters immediately. Netflix is no longer a secondary or tertiary platform. With 94 million monthly users on the ad tier and management projecting $3 billion in annual revenue, Netflix is competing for ad dollars that previously flowed only to Google, Meta, and Amazon. The CPM rates that make sense at $1.5B don't hold at $3B unless Netflix can demonstrate value advertisers can't get elsewhere. Those AI-blended ads and interactive formats are the answer—premium placements at scale.

For competing streamers, this creates urgent timeline pressure. Amazon Prime Video, Disney Plus, and others built ad tiers, but Netflix just proved the unit economics work at meaningful scale. That shifts from "should we have ads?" to "how fast can we scale them?" Disney's earnings calls from 2025 showed management testing similar models. That's no longer experimentation—it's survival.

The broader inflection is about business model maturity. Netflix built its empire on pure-play subscription economics. The 325 million subscribers and $12.05 billion annual revenue announced Tuesday show that model still works. But the company just demonstrated it's not the only model. When ads double annually while subscriber growth remains steady, you're looking at a platform that's simultaneously maximizing subscription value and creating new revenue streams. That's the kind of margin expansion that changes investor valuations and industry competitiveness.

What makes this moment significant isn't the revenue number itself—$1.5B is meaningful but not transformative relative to Netflix's overall business. It's the trajectory Netflix is signaling and the confidence management is expressing about doubling again. Companies don't project that kind of acceleration without internal data supporting it. Peters wouldn't have made that $3B statement without believing the ads infrastructure, inventory, and pricing support it.

The next inflection to watch arrives in Q2 2026 when interactive video ads launch. If Netflix can demonstrate those generate higher CPMs than standard pre-roll, the entire economics of streaming advertising shift. Premium formats at scale change how much advertiser budgets flow to streaming versus traditional media. That's when this story stops being about Netflix's business model and starts being about reshaping the advertising market itself.

Netflix's crossing into $1.5 billion in advertising revenue signals a fundamental shift in streaming economics. This isn't margin enhancement—it's business model validation at scale. For investors, the dual-revenue approach reduces dependency on subscriber growth deceleration. For decision-makers at competing streaming platforms, the signal is urgent: advertising at Netflix scale is possible, and delaying acceleration costs market share. For ad buyers, this opens new premium inventory competing for budget previously reserved for YouTube and Meta. The real inflection arrives Q2 2026 when interactive video ads launch. Watch CPM rates on those formats—they'll determine whether Netflix's $3B 2026 projection holds and whether streaming becomes a primary advertising channel.