With a sub-50 percent fill rate, Netflix has room to boost ad income without adding subscribers. Even a modest 10-point lift in fill could translate to an additional $300 million to $400 million in annual ad revenue, according to third-party modeling. To address this gap, Netflix deployed its in-house Netflix Ads Suite in 2025 and plans to expand first-party data access for advertisers in 2026 in a privacy-safe framework. The company is also testing modular interactive video ads designed to improve engagement and advertiser ROI, key levers for closing the revenue per user gap with its ad-free plans. While ad growth remains a bright spot, Netflix’s aggressive pursuit of Warner Bros. Discovery’s studio assets—an $82.7 billion all-cash bid—has weighed on investor sentiment. Shares have retreated sharply from their mid-2025 highs, trading at roughly 28× consensus 2026 earnings projections, above broader tech multiples and raising valuation concerns. Coupled with management’s guidance for 12 percent to 14 percent revenue growth in 2026—below 2025’s 17 percent advance—investors worry that acquisition risks and a premium valuation could overshadow near-term ad monetization gains. Netflix’s ad-supported tier generated over $1.5 billion in revenue in 2025, a 2.5× increase from the prior year, fueled by rapid subscriber adoption. By year-end the streamer exceeded 325 million paid memberships and reported more than 190 million monthly active ad viewers. Despite this scale, executives acknowledge that average revenue per ad-supported user lags the ad-free standard tier, a discrepancy highlighted by co-CEO Greg Peters on the Q4 call. External estimates place Netflix’s ad fill rate—the share of ad opportunities actually sold—at only 45 percent, implying that more than half of potential ad inventory sits unsold and undercutting overall yield.