Netflix to Roll Out AI-Powered Ads in 2026

Netflix is set to introduce a new era of advertising, integrating generative AI into ad formats by 2026. This move aims to boost ad revenue and offer advertisers innovative ways to engage with viewers.

Interactive Ads Coming Soon

At its second annual upfront presentation, Netflix unveiled plans for interactive mid-roll and pause ads enhanced with generative AI. This initiative reflects Netflix’s strategy to explore diverse advertising models, similar to other streaming platforms.

Amy Reinhard, President of Advertising at Netflix, highlighted that subscribers are highly attentive to mid-roll ads. The company began testing pause ads in July 2024, paving the way for these advanced ad formats.

Ad-Supported Tier Gains Traction

Netflix’s ad-supported subscription tier, launched in November 2022, has grown to 94 million subscribers. This represents a 34% increase since November, with half of new subscribers opting for the $8 per month ad-supported plan over the ad-free options, which start at $18 per month.

Reinhard noted that ad subscribers spend an average of 41 hours per month on Netflix, demonstrating significant engagement.

Expanding Advertising Capabilities

In April, Netflix launched its in-house advertising platform in the US, following its debut in Canada. The platform is slated for global expansion by June, indicating Netflix’s commitment to growing its advertising business.

Netflix considers its advertising venture to be in the early stages, projecting accelerated growth and a doubling of advertising revenue in 2025.

“The foundations of our ads business are in place, and going forward, the pace of progress will be even faster,” Reinhard stated.

Industry-Wide Trend

Netflix’s move aligns with broader trends in the streaming industry, where platforms are increasingly incorporating innovative ad formats. Amazon, for example, recently announced contextual pause ads and shoppable ads for Prime Video.

The integration of AI and interactive elements in advertising reflects the evolving landscape of digital advertising, promising more engaging and personalized experiences for viewers.