• Advertising took over the streaming-TV experience this year, and it'll only get bigger next year.
• Interactive ads that try to get viewers to shop or take other actions are gaining traction.
• This article is part of "Transforming Business," a series on the must-know leaders and trends impacting industries.

It's back to the future in Hollywood.

Streaming is starting to look like the TV days of old. Entertainment for the masses is back. Bundles are making it easier to consolidate subscriptions.

And ads seem to be everywhere.

Netflix, Disney+, and Max — which all started ad-free — now have cheaper ad-supported tiers. Amazon turned on ads in Prime Video this year, making advertising de facto for more than 100 million viewers in the US in one fell swoop.

EMARKETER expects streaming advertising to reach half of linear-TV advertising's size in 2024 and approach parity with it in 2027.

According to the analytics firm Antenna, these cheaper versions are gaining traction with viewers, too. In May, most new paying subscribers to five major streamers were choosing ad-supported tiers — a year earlier, this was true for only two streamers.

On Disney's latest earnings call, execs said that about 60% of new subscribers in the US were opting for its ad-supported tier, which accounted for 37% of its total US subscribers.

Ad-supported TV viewing also is on the rise through free services like Fox's Tubi, Paramount's Pluto TV, and The Roku Channel. According to Nielsen, those services plus YouTube made up 14.8% of viewing in July, up from 12.5% a year earlier.

"What's old is new again," said Jonathan Miller, a veteran media executive and chief executive of Integrated Media Co., which invests in digital media.

Miller sees ad tiers as a validation of the dual revenue streams that long supported cable. "Advertising and subscriptions have always been a successful model," he said.

Streaming ads are here to stay because — along with bundling, cheaper programming, and password-sharing crackdowns — they're one of the ways streamers can help make themselves sustainable.

Ads have also begun to directly shape the content streamers offer. Streamers are showing more sports and other live programming because of the big audiences and advertisers they attract.

For example, Netflix's highly anticipated Mike Tyson-Jake Paul fight on November 15 was a win for the streamer despite some tech glitches. Why? Because it showed Netflix's ability to draw huge audiences at once; it said that as many as 60 million households tuned in. That large audience bodes well for Netflix's NFL games on Christmas and its live WWE programming set to debut in January.

Viewers' tolerance for ads will be increasingly tested

Streamers that dipped a toe in the ad space are looking to wade in.

The ad load — or ad volume per hour of entertainment — has crept up over the past year, according to the measurement firm MediaRadar. There was an average of six minutes of ads per hour in September across eight leading ad-supported streamers, up by 9% from January 2023, when Netflix and Disney had just entered the ad-supported game. That's still far lower than cable, where ad loads can push an eye-watering 15 minutes or more an hour. Viewers are also more likely to tolerate ads in live sports because people are used to them being part of that content.

Amazon and Warner Bros. Discovery recently said they'd start showing more ads to their streaming viewers in 2025, while emphasizing that their ad loads were lower than their competitors.

"On the ad-load side, we are light," WBD's streaming chief, JB Perrette, said of the streamer Max during the company's third-quarter earnings call. "We have a very light ad load compared to everyone else in the market, so there's room to grow on the capacity side."

The industry consensus is that streaming ad loads won't become a throwback to cable, though — at least not anytime soon.

For one thing, it's a buyer's market. Amazon flooded the market with ad inventory, which depressed ad prices for everyone. Streamers aren't incentivized to add too much more ad inventory because it'll just drive the price down more. Some advertisers are also wary of annoying viewers who are still getting used to seeing ads in streaming.

"The supply has grown significantly over the last few years," said Maureen Bosetti, the chief investment officer for Mediabrands. "It's created a marketplace for marketers."

Makers of streaming video ads are also becoming more ambitious. It's not enough for an ad to be seen — they'll try to get viewers to take action, whether by clicking a QR code or dropping a featured product in their shopping cart. These interactive ads could get higher price tags at a time when streaming ad prices have come down.

"As a consumer, I'm seeing more of them," Jessica Brown, a managing director of digital investment at GroupM, said of interactive streaming ads. "We're getting more pitches from the streaming partners. You can measure success in a different way."

Warner Bros. Discovery recently rolled out two such formats. "Shop with Max" identifies items in TV shows and films and matches them with relevant advertiser products that viewers can shop while they watch. "Moments" uses AI to figure out themes, sentiments, and on-screen elements that line up tonally with the advertiser's message.

Fubo recently announced four ad formats, including ones that show trivia questions or polls and product carousels. Fubo said such ads made people 47% more likely to purchase something compared with standard video ads.

"A big objective we have is to make a majority of ads have some form of interactive or engaging feature," Krishan Bhatia, an NBCUniversal exec who was hired by Amazon to lead its Prime Video ads push, said at a recent event. "What brands love about it is not just the fact that you generate a potential purchase off it but people are spending more time with your brands."

• New survey data from Evercore suggests Netflix has room to raise prices in the US.
• The percentage of US subscribers who said they'd cancel in response to a price hike is well down.
• Almost half indicated more live content like the Paul-Tyson fight could keep them from canceling.

Netflix's subscriber gains from its password-sharing crackdown could be waning, and some on Wall Street think it'll raise prices soon to keep its growth going.

New survey data from Evercore ISI just added fuel to the theory. Its quarterly survey of Netflix subscribers, published December 1, showed that Netflix is in a strong position in the US based on market penetration, satisfaction, and likelihood of canceling. Citibank analysts also recently wrote that Netflix could raise US prices by 12% in 2025.

In Evercore's survey, price sensitivity among US Netflix subscribers was lower than it had been in four years, which should make it easier for the streamer to push through price increases. When asked how they'd respond to a $1 a month price hike, 26% of 1,300 US respondents said they'd be highly likely to cancel, down from 45% who said so in August.

Consumers often overstate their willingness to cancel services in response to price increases, so those absolute numbers should be taken with a big grain of salt. Netflix has consistently had a lower cancellation rate than the other major streamers, even as it's raised prices over the years, according to the data firm Antenna.

When it came to penetration, Netflix continued to dominate, with 58% saying they watched the service in the past 12 months, up 1% from the previous quarter and ahead of Amazon's Prime Video (54%) and Disney's Hulu (44%).

A third factor, satisfaction, was the highest it had been since the third quarter of 2020, with 63% of those surveyed by Evercore saying they were "extremely/very satisfied" with the service.

In addition to a hit-filled third quarter ("The Perfect Couple," "Monsters: The Erik and Lyle Menendez Story," and more), Netflix has benefited from buzzy live events like the Jake Paul-Mike Tyson fight. Netflix's lower-priced ad tier has also increasingly kept people from canceling while giving the streamer cover to raise prices on its pricier, ad-free tiers. Live Christmas NFL games this month and WWE "Raw" starting in 2025 will likely drive more momentum, with 47% of those surveyed saying they would be more likely to keep Netflix if more live content were added.

Netflix has been raising prices roughly once a year, though unevenly among its various tiers. It's been over a year since the last increase, in October 2023, when Netflix raised the price of its Premium plan by $3 to $22.99 a month and upped the cost of its now-defunct Basic plan. The last time Netflix raised prices on its Standard ad-free plan was January 2022, when it raised it by $1.50 to $15.49.

When asked about price increases on Netflix's third-quarter earnings call in October, co-CEO Greg Peters said he saw a "tremendous amount of potential" if Netflix kept improving its TV and film offerings and expanded into new areas like live events. The company recently raised prices in Europe and Japan and said the results met expectations.

"Our approach towards pricing, it's been remarkably consistent over many, many years," Peters said on the call. "And our core theory is we've got to work really, really hard to make sure that we are delivering more value to members every quarter and then we sort of assess, based on how that's going, metrics like engagement, like acquisition, retention, did we do a good job there? How do we actually deliver on that promise of more value? And when we do, then we occasionally ask members to pay a bit more so we can invest that forward and keep that whole process going."

• Netflix emerged as the winner of the streaming wars this year.
• It's forecasting billions of dollars in profit, and its stock is rocketing.
• From vast ad ambitions to zeitgeisty true crime fare, here are five of its biggest achievements.

The year 2024 has been one to remember for Netflix.

Crowned the winner of the streaming wars, the streamer solidified its already huge lead in subscribers — with more than 280 million paying users around the world as of the third quarter, generating billions of dollars in profit annually and sending its stock price soaring.

Meanwhile, Netflix continued to flex its first-mover advantage over cash-hungry rivals, who retrenched and returned to licensing their shows back to Netflix, which will likely fuel its continued dominance.

Netflix continues to put out hits that keep people watching and subscribing. Lately, it's been leaning into popular fare like true crime and live events that have big advertiser — and water-cooler — appeal.

It's continued to capitalize on its password-sharing crackdown and is ramping up ad tech and measurement deals to entice more advertisers to buy on the platform.

Netflix faces questions about how much more it can grow its audience without sacrificing profits, whether it can compete for ad dollars with the likes of Amazon's Prime Video, and how it can capture younger viewers who grew up on YouTube.

But for now, here's a look back at the biggest swings Netflix took this past year:

A massive push into live sports

Netflix swung big into live programming in 2024, a format that's key to its burgeoning ad business.

The streamer hosted its most-watched live event to date in November, a glitch-ridden boxing bout between Jake Paul and Mike Tyson that drew 60 million households as live viewers. And it'll close the year with another spectacle: its first Christmas Day NFL game, which will include Beyoncé performing at half-time.

Stellar advertising growth amid an executive shake-up

Netflix has undergone leadership changes across multiple teams this year. In advertising, where the company harbors vast ambitions, Ampersand's Nicolle Pangis replaced Peter Naylor as VP of advertising.

The move came as Netflix reported stellar growth for ad-supported subscribers in 2024 — to the tune of 70 million, up from 40 million in May.

Next up for ads? Netflix is building its own ad technology to further open the spigot, which it said will roll out next year.

A leadership and strategy overhaul in film

At the beginning of the year, Netflix parted ways with longtime movie chief Scott Stuber.

The New York Times reported in April that Stuber clashed with higher-ups over what kind of movies to make. Chief Content Officer Bela Bajaria told staff in a meeting that quality needed to improve as the company shifted strategy.

Incoming film boss Dan Lin entered with a streamlined vision.

Rather than big-budget action films and big-name stars, he sought to diversify the company's offering, prioritizing in-house producers and skipping theatrical releases. Lin also ended the massive upfront checks the company had been writing to movie stars.

True crime hits with real-world consequences

Netflix continued to focus on true crime this year. But while its series were enormously popular, some plunged the streamer into controversy.

The stalker saga "Baby Reindeer" and the scammer series "Inventing Anna" drew defamation suits, which Netflix said it would defend. And Netflix's two projects about the Menendez brothers — a Ryan Murphy-produced drama and an accompanying documentary — were also ensconced in controversy.

The brothers' families criticized the show, though Murphy has said the brothers should be grateful given the attention the project received. In October, Los Angeles's top prosecutor recommended the brothers be resentenced with the option of parole.

A password crackdown continued to fuel growth

Subscribers initially balked at Netflix's bid to ban password sharing, but in the end, the streamer prevailed.

The move helped to fuel impressive earnings reports this year, with subscriber growth that repeatedly surpassed expectations — and caused its stock to soar.

While Netflix has emerged as the clear victor of the streaming wars, that wasn't always a foregone conclusion given the loads of debt it previously accrued to fund its production war chest. Today, the streamer is forecasting billions of dollars in profit while competitors struggle to break even.

That said, analysts expect the effects of Netflix's password crackdown to diminish in the future.

Correction: December 3, 2024 — The Paul-Tyson fight drew 60 million households, not people, as live viewers, Netflix said. An earlier version of this story misstated that figure.

• Netflix continues to rewrite the playbook for global entertainment.
• It's solidified its position as the dominant streamer.
• It now faces new challenges as it enters the advertising and gaming markets.

Since Netflix began its worldwide expansion in 2016, the streaming service has rewritten the playbook for global entertainment — from TV to film, and, more recently, live entertainment and video games.

Hollywood used to export most global hit series and movies. Through Netflix's investments in international TV and film, programs like South Korea's "Squid Game" and France's "Lupin" have found massive audiences around the world. Netflix's English-language originals, such as Shonda Rhimes' "Bridgerton," Ryan Murphy's "Dahmer," and Tim Burton's "Wednesday," have also broken the streamer's internal streaming viewership records. And Netflix has moved into live programming like sports and comedy. 

Netflix has generally been declared the winner of the streaming wars, especially after the 2023 writers' and actors' strikes shut down Hollywood production and other streamers retrenched to stem losses. Its stock hit an all-time high this year while other media companies floundered, and it's making headway with its crackdown on password sharing and its ad-supported subscription tier. Cash-hungry rivals have returned to licensing their shows back to Netflix, which could help make the streamer even more dominant.

Netflix's impact on the global TV industry remains undeniable. Still, it now faces fresh questions about its audience growth potential, ability to compete for ad dollars with the likes of Amazon's Prime Video, and opportunity to capture younger viewers who are more drawn to YouTube than traditional TV and film.

How Netflix disrupted the global TV industry

To thrive on an international stage, Netflix sought both US mass-market programming like "Stranger Things" as well as local content that could win over viewers in specific markets (and produce breakout hits).

The strategy helped the streaming service grow its customer base to more than 282 million global subscribers. Its momentum also reinvigorated production in places like Germany, Mexico, and India.

More recently, it, along with other streamers, has sought broadcast network-type shows that will grab broad viewership, plus fewer, lower-budget movies under new film chief Dan Lin. It's also dipped into live programming like sports and comedy. While its highly anticipated fight between Mike Tyson and Jake Paul on November 15 was rife with streaming glitches, Netflix said it drew 60 million households, showing its ability to get huge viewership for live programming.  

More on Netflix's changing content direction:

• Netflix is shifting strategy away from big-budget action flicks and big-name stars. Here's its new plan.
• Netflix helped bring original films to streaming — now it's pulling back, and Hollywood is feeling the pinch
• Leaked documents reveal what Netflix wants in new shows, from more 'Dahmer'-style true crime to its own version of 'The Bear'
• International TV producers describe how streaming competition is changing their markets

Netflix shook up its leadership to reflect a changing business

After breaking all of Hollywood's rules and disrupting the entertainment industry, Netflix — since its first-ever subscriber loss — has been breaking its own rules, reversing its stances on password sharing and advertising.

It also shook up its leadership in 2023, elevating Greg Peters to co-CEO, reflecting its shift to new revenue streams, alongside Ted Sarandos, as cofounder Reed Hastings moved to executive chair.

Meanwhile, TV head Bela Bajaria was named chief content officer, with film reporting to her. 

An elite team of interdisciplinary execs helps make Netflix's biggest decisions. Known internally as the "Lstaff" — the "L" stands for leadership — the group sits between the company's officers and its larger executive corps of vice presidents and above, who are called the "Estaff."

More on Netflix's corporate structure:

• Netflix insiders describe its new co-CEO as 'hyper rational' and a behind-the-scenes power player leading key expansions in ads, gaming, and more
• Netflix salaries revealed: How much engineers, marketers, content execs, and others get paid

Netflix continues to grow, despite layoffs

Netflix has laid off hundreds of staffers over the past couple of years as the broader media and entertainment space grapples with a bear market.

Still, it has remained a desirable place to work in recent years despite some tests its corporate culture has faced. While hiring has slowed, it's still adding employees to maintain its lead over other paid streamers and fuel its global expansion.

More on Netflix's business model and company culture:

• Netflix insiders describe a culture shift to 'fear-based' decision making, execs stretched thin, and belt tightening amid layoffs and subscriber losses
• Netflix spending cuts fuel fears that its golden creative age is over
• Netflix exec reveals sports ambitions and what's next for live sports as golf series 'Full Swing' debuts

Netflix is moving into advertising and gaming

Netflix faces more competition from TV viewers than ever from traditional media companies like Disney and Warner Bros. Discovery and tech players Apple, Amazon, and YouTube, many of which are further along in selling ads and offering live sports programming.

The competition is pushing Netflix to continue evolving. It introduced a cheaper, ad-supported tier in late 2022 to combat slowing subscriber growth, and claimed 70 million global users of the ad tier in November. It started building a video games business in 2021 and has been selling merchandise and experiences tied to series like "Squid Game" and "Bridgerton."  

But the ad tier has been slow to meet the scale demanded by advertisers, while its games have yet to take off. This summer, Netflix shook up its games leadership and shut down a unit dedicated to developing elaborate "Triple-A" games to focus on casual games. Netflix also laid off a few dozen gaming employees.

Netflix has repeatedly said both businesses would grow slowly and that it expected games to be a small part of its business. It's introducing tech to grow its advertising sales and adding live events such as the Tyson-Paul fight, two NFL Christmas Day games, and WWE fights — things that are catnip to advertisers.

More on Netflix's advertising and gaming ambitions: 

• Netflix has launched its ad-supported tier — here's everything we know about how the streaming giant is pitching advertisers
• Meet the 19 execs driving Netflix's advertising push
• Why Netflix is placing cars like the Chevy Bolt in its shows, and what the streamer's deal with GM means for its growing advertising business
• Netflix is doubling down on gaming, with dozens of new hires and a dedicated studio, as it chases younger audiences and battles to turn back subscriber losses

Elaine Low contributed to an earlier version of this post.