The battle for streaming supremacy between Netflix and YouTube is heating up and advertising is playing a big role in revenue growth. In 2025, Netflix will overtake YouTube in total revenue when it starts to advertise. YouTube has been refining its monetization strategies for years and Netflix is making billions from its ad-supported plans. The competition is fiercer than ever.
Here’s how advertising is shaping the revenue for both.
Understanding The Rise of Ads in Streaming
Ad-supported streaming has changed the way platforms make money. Once subscription-based, the industry is now moving towards hybrid monetization models that mix ads with premium content. Consumers are increasingly happy to watch ads in exchange for lower subscription costs, so ad-supported tiers are more viable. With big players like Disney and HBO Max also going ad-supported, the competition for digital ad revenue is fiercer than ever.
Netflix and YouTube are adapting to these trends, finding ways to maximize ad revenue while keeping users happy. But how will ads impact the battle for revenue between these two?
How Advertising is Changing the Netflix vs YouTube Revenue Game
Streaming platforms have changed how companies make money. Both Netflix and YouTube use advertising to make money, but their approaches are very different. Let’s examine the factors that will tip the scales in 2025.
Netflix’s Ad Model Switch
For years Netflix was purely a subscription-based service, ad-free. But with the introduction of an ad-supported tier in late 2022, things changed.
- Attracting Price-Conscious Subscribers: The ad-supported plan lets Netflix reach users who wouldn’t have subscribed otherwise. This expands their user base while keeping the revenue stream steady.
- Advertiser Demand: With premium content and high engagement, advertisers want to be on Netflix, and are willing to pay billions for ads.
Netflix’s ad tier is expected to bring in $3.2 billion in 2025, adding a new layer to its business model.
YouTube’s Ad Dominance and Problems
YouTube has been the king of digital advertising for years, with a global user base of over 2 billion. But despite being the king, YouTube has problems in 2025.
- Ad-Skipping and Ad-Blockers: YouTube’s ad-heavy approach has led to more ad blockers, reducing ad revenue.
- Premium Subscriptions vs. Free Users: YouTube Premium, which is ad-free, generates a lot of revenue, but still relies on ad-supported free users.
Despite these challenges, YouTube is expected to make $36 billion in ad revenue in 2025, still at the top of the digital ad mountain.
Which One Offers Better Ad Value?
Both have their pros, but it depends on audience reach and engagement.
- Netflix’s Edge: Premium content means ads are seen by an engaged audience. No user-generated content like YouTube, so more attractive for brands looking for a controlled and brand-safe environment.
- YouTube’s Strength: Huge audience and advanced targeting options, the go to platform for digital marketers. flexibility in ad formats, skippable and non-skippable ads, sponsorships, and interactive elements.
Advertisers need to weigh the benefits of high engagement on Netflix vs mass reach on YouTube when deciding where to allocate their budgets.
Revenue Projections: Will Netflix Beat YouTube?
According to Omdia’s research, Netflix is going to surpass YouTube in total video revenue in 2025.
- Netflix’s Total Revenue: $46.2 billion ($43.2 billion from subs and $3.2 billion from ads)
- YouTube’s Total Revenue: $45.6 billion ($36 billion from ads and $9.6 billion from YouTube Premium)
This shows how Netflix’s hybrid model is positioning it as a major player in the streaming space.
User Overlap and Competitive Strategies
Interestingly a big portion of users consume content on both platforms, so unique market dynamics.
- Audience Overlap: In the US 57% of YouTube users are also Netflix subs, in the UK 67%
- Strategic Partnerships: Despite being rivals, Netflix and YouTube have collaborated on marketing campaigns, using YouTube to promote Netflix originals.
This competitive yet symbiotic relationship will continue to shape the streaming industry.
FAQs
How big is YouTube compared to Netflix?
YouTube is much bigger than Netflix in terms of user base with over 2.5 billion monthly active users vs 260 million subscribers worldwide. But Netflix makes more money per user since it’s a subscription based model.
What is the Netflix ad strategy?
Netflix added an ad supported tier to attract price conscious users and generate more revenue from advertisers. This helps them expand their audience while maintaining premium content for both subscribers and advertisers.
Do more people use YouTube or Netflix?
YouTube has a much larger audience with billions of free users watching videos daily vs Netflix’s paid subscribers. But Netflix users tend to watch more per session since they consume long form premium content.
What uses more data, Netflix or YouTube?
Netflix uses more data per hour since it’s high quality streaming, 3GB per hour for HD and up to 7GB per hour for 4K. YouTube varies based on quality but generally uses less data for lower res videos.
Wrapping Up
The 2025 streaming revenue war is seeing a big shift as Netflix’s entry into the ad market challenges YouTube’s dominance. With Netflix expected to surpass YouTube in total revenue, advertising has become a game changer for both. While YouTube leads in digital ad revenue, Netflix’s premium content and hybrid model make it a rising force in the streaming wars. As advertisers and users adapt, the impact of ads on revenue will continue to evolve and redefine the future of digital entertainment.
