Netflix dropped two sets of numbers this week: its 2025 full-year earnings and a revised offer for Warner Bros. Discovery.
During a call with investors on Tuesday, Netflix boasted that it beat its revenue expectations for last year, ending 2025 with $42.5 billion in revenue, a 16% year-over-year jump.
Of that, $1.5 billion came from advertising, which is a roughly 150% year-over-year revenue increase. (Keep in mind, however, that Netflix’s ads biz is only three years old and therefore growing from a smallish base.)
Netflix didn’t provide an updated number of ad-supported sign-ups, although it did share back in November that it has 190 million monthly active viewers on its ad tier.
Now that Netflix’s ads business has “grown to scale,” said Co-CEO Greg Peters, “our main focus is increasing the monetization of that inventory.” Netflix expects its ad revenue to nearly double again this year and hit roughly $3 billion.
Stack Attack
To drum up more demand from media buyers in 2026, Netflix is adding more data and ad formats to its product suite.
“We’re making more Netflix first-party data accessible – in a privacy-safe way – for assessing media investments,” Peters said, noting that this should help improve ad performance. Netflix has also been testing more interactive ad formats to improve outcomes and intends to make those units available in Q2.
As for the infrastructure supporting Netflix’s advertising business, “we’re continuing to build out that ad tech stack,” Peters said, referring to its in-house tech stack, which has been in the works for a couple of years.
Although Netflix was vague about the data, tech and ad formats it plans to unveil this year, the monetization play is clear. Enhancing ad targeting and measurement will help Netflix raise ad fill rates, Peters said, which should, in turn, boost ad revenue per member – a key metric for investors evaluating the long-term profitability of a media company.
Still, Netflix estimates its own share of TV viewing to be under 10% across the major global markets the company cares about, including Europe and Latin America, which means there’s still work to be done.
All eyes on WBD
But what about the 90% of TV viewing that Netflix doesn’t touch? That’s what Warner Bros. Discovery is for.
“We’re working really hard to close the acquisition of Warner Bros. Studios and HBO Max, which we see as a strategic accelerant,” said Ted Sarandos, Netflix’s other co-CEO.
WBD’s studio would be a valuable asset for Netflix because it could then produce even more content, including films with a theatrical window of exclusivity that generate box-office sales.
Netflix is also confident in its ability to get the deal approved by regulators.
When, during the call, investor and analyst Rich Greenfield of LightShed Partners asked Netflix’s executives why they’re feeling so self-assured, Sarandos noted that Netflix is in contact with both the Department of Justice in the US and the European Commission. Netflix has also submitted its HSR filing, which requires the parties involved in large proposed M&A transactions to notify the FTC and DOJ if the deal meets specified size thresholds.
In the meantime, Netflix remains focused on expanding its content programming slate to include more live sports and licensed content from Sony, Universal Studios, Paramount and others.
Overall, Netflix hopes that widening its slate and broadening its ad offerings will help the platform compete with its most formidable rivals – namely, YouTube.
“YouTube is TV,” Sarandos said. Within the media and entertainment industry, “we all compete with them in every dimension: for talent, for ad dollars, for subscription dollars.”
In that case, may the best media behemoth win.
