Sign in Subscribe
Video

Netflix narrows ad-free price gap across Europe to boost ad revenue

Netflix systematically reduces price differences between ad-supported and premium tiers across European markets to accelerate advertising revenue growth.

Luis Rijo

• 5 min read
Netflix tablet streaming interface showing pricing strategy impact on European subscribers choosing ad-supported tiers.
Netflix tablet streaming interface showing pricing strategy impact on European subscribers choosing ad-supported tiers.

Netflix has executed a calculated pricing strategy across Europe throughout 2024, systematically narrowing the price gap between its ad-supported and ad-free tiers to funnel subscribers toward advertising-based plans. The streaming giant doubled its advertising revenue year-over-year in 2024 and expects to double it again in 2025, making this pricing realignment central to its revenue transformation.

The strategy represents a fundamental shift in Netflix's business model, moving from pure subscription revenue to a hybrid model that captures both subscription fees and advertising dollars. For the marketing community, this evolution creates new opportunities and challenges as Netflix's 70 million monthly active ad-tier users become increasingly valuable advertising inventory.

PPC Land Newsletter

Subscribe the PPC Land newsletter ✉️ for similar stories like this one. Receive the news every day in your inbox. Free of ads. 10 USD per year.

Subscribe

Summary

Who: Netflix implemented pricing changes affecting millions of European subscribers across Spain, Italy, France, and Germany, with François Godard from Enders Analysis providing market analysis.

What: Netflix systematically narrowed price gaps between ad-supported and ad-free tiers through strategic price increases on premium plans and enhanced value propositions for ad-supported alternatives.

When: Changes occurred throughout 2024, with France adjusting prices in April, Germany in May, and Spain/Italy in October, with additional adjustments continuing into 2025.

Where: European markets including Spain, Italy, France, and Germany, with similar strategies expected across Netflix's 13 ad-supported countries globally.

Why: Netflix aims to accelerate advertising revenue growth by funneling subscribers toward ad-supported tiers, supporting its goal of doubling advertising revenue in 2025 while maintaining subscription revenue through strategic price increases.

Follow PPC Land on Google News

European markets see coordinated price adjustments

Netflix implemented pricing changes across multiple European markets in 2024, with each adjustment designed to make ad-supported tiers more attractive relative to ad-free alternatives. In Spain and Italy, changes implemented in October 2024 reduced the premium plan ratio from 2.4 times to 2.0 times the cost of the cheapest package, according to François Godard from Enders Analysis.

France saw even more dramatic narrowing in April 2024, with the ratio dropping from 2.3 to 1.8 times the ad-supported price. The French market experienced multiple adjustments throughout 2024, with the Standard with Ads plan increasing from €5.99 to €7.99 monthly, while the Premium ad-free tier rose from €17.99 to €21.99.

Germany's pricing evolution followed a similar pattern, with the last major increase occurring in May 2024. The Premium plan jumped 14% from €13.99 to €15.99 monthly, while the Standard plan increased more modestly from €10.99 to €11.99. Industry analysts expect further narrowing in Germany by year-end, following the pattern established in other European markets.

Technical enhancements support pricing strategy

Netflix has substantially enhanced its ad-supported tier's technical capabilities to justify the pricing strategy. The service upgraded video quality from 720p to 1080p HD, increased concurrent streams from one to two, and added download functionality with a 15-download monthly limit per device.

The ad load remains relatively light at 4-5 minutes per hour, with Netflix offering 10-, 15-, 20-, 30-, and 60-second advertisement formats. Content availability has improved dramatically, with 98% of the Netflix library now accessible to ad-supported subscribers, up from just 5.1% at launch.

These technical improvements address early criticisms of the ad-supported tier while maintaining clear differentiation from premium plans. The enhanced value proposition supports Netflix's pricing strategy by making the ad-supported option more compelling relative to ad-free alternatives.

Advertising market context drives strategy

The pricing strategy aligns with significant disparities in advertising spending across European markets. According to Dentsu data, advertising expenditure per capita in 2024 varies dramatically: $940 in the United States, $643 in the United Kingdom, $358 in Germany, $265 in France, and $143 in Italy.

These variations help explain Netflix's market-specific pricing approaches. Higher advertising spending markets like the UK can support larger price gaps between ad-supported and ad-free tiers, while lower-spending markets like Italy benefit from narrower gaps that encourage ad-tier adoption.

The connected TV advertising market, valued at $30.1 billion globally in 2024 and projected to reach $42.4 billion by 2027, provides the revenue opportunity that justifies Netflix's pricing strategy. European CTV advertising alone is expected to grow 23.5% annually, outperforming traditional video advertising.

Revenue impact exceeds expectations

Netflix's pricing strategy has generated substantial results across European markets. In Germany, 32% of subscribers now use ad-supported plans, representing a 33% increase from Q4 2023. Globally, ad-supported plans accounted for 55% of new sign-ups in Q4 2024, up from 45% in July 2024.

The financial impact has been significant. Netflix's advertising revenue reached approximately $2.12 billion in 2024, representing 300% growth from $509 million in 2023. The company projects advertising revenue will double again in 2025, reaching an estimated $3.2 billion.

Co-CEO Greg Peters emphasized the value proposition during the Q4 2024 earnings call: "We believe that our starting price for Standard With Ads—even after the price increase—is an incredible entertainment value. And it's a highly accessible entry point."

Follow PPC Land on LinkedIn

Marketing community implications

For advertisers and marketing professionals, Netflix's pricing strategy creates both opportunities and challenges. The narrowing price gap increases ad-supported subscriber growth, expanding available advertising inventory. Netflix's higher engagement rates—ad-supported members are twice as likely to respond to advertisements compared to other platforms—justify premium advertising rates.

However, increased competition from Amazon Prime Video's automatic ad-tier inclusion has pressured connected TV advertising costs industry-wide. Netflix CPMs decreased 26.3% following Amazon's entry, though Netflix maintains premium rates of $29-35 compared to competitors' $20-30 ranges.

The expansion of Netflix's programmatic advertising capabilities through partnerships with Yahoo DSP, The Trade Desk, and Google DV360 provides marketers with sophisticated targeting and measurement tools. Netflix's proprietary "Netflix Ads Suite," launched in April 2025, offers direct access to its global audience without third-party dependencies.

Competitive landscape evolution

Netflix's pricing strategy has forced competitive responses across the streaming industry. Disney+ has grown its ad-supported subscriber base to 17% of total subscribers, while Amazon Prime Video's automatic ad-tier inclusion has created the largest ad-supported streaming audience with 130 million subscribers.

The strategic implications extend beyond pricing. Netflix's approach signals a broader industry transformation from subscription-only models to advertising-supported alternatives. This shift redistributes television advertising budgets from traditional linear TV to streaming platforms, accelerating the connected TV market's growth.

European broadcasters have responded with their own advertising-supported streaming launches, including TF1 and M6+ in France, creating a more competitive environment for advertiser attention and subscriber acquisition.

Industry transformation

Netflix's European pricing strategy represents a calculated evolution toward advertising-supported streaming as the dominant model. The company's systematic market-by-market implementation demonstrates confidence in the approach's effectiveness.

Industry analysts expect continued price gap narrowing as Netflix balances subscriber growth with advertising revenue optimization. The company's goal of doubling advertising revenue in 2025 requires sustained ad-tier subscriber growth, making pricing strategy central to financial performance.

For the marketing community, Netflix's transformation creates new opportunities for reaching engaged audiences through premium content. The company's technical capabilities, including Nielsen ratings integration and programmatic buying options, provide advertisers with sophisticated tools for campaign optimization and measurement.

Timeline