How Does Netflix Make Money?

Netflix sells one thing: a monthly subscription. Unlike YouTube or Meta, almost all of its money comes straight from members. But the model has changed a lot in the last few years, with an ad-supported plan, a crackdown on password sharing, and live events.

In 2025, Netflix reported $45.2 billion in revenue, up 16%, with a 29.5% operating margin. Here's how it gets there, using Netflix's own shareholder letter.

🎯 Quick Answer (30-Second Read)

  • Revenue: $45.2B in 2025 (+16%). Operating margin: 29.5%, up from 26.7% in 2024.
  • Members: over 325 million paid memberships.
  • Subscriptions are still the vast majority of revenue.
  • Ads: ad revenue more than doubled to over $1.5B in 2025, and Netflix expects it to roughly double again in 2026.
  • Biggest cost: content, both licensed and original shows and films.
  • 2026 outlook: $50.7B–$51.7B revenue and a 31.5% operating margin target.

Netflix in Numbers (2025)

$45.2B
revenue (+16%)
29.5%
operating margin
325M+
paid memberships
$1.5B+
ad revenue (more than doubled)
xychart-beta title "Netflix operating margin" x-axis ["2024", "2025", "2026 target"] y-axis "%" 0 --> 35 bar [26.7, 29.5, 31.5]

The Revenue Engines

flowchart TB NF["Netflix revenue
$45.2B (2025)"] NF --> SUB["Subscriptions
(vast majority)"] NF --> AD["Advertising
$1.5B+ and growing"] SUB --> P1["Ad-free plans
(Standard, Premium)"] SUB --> P2["Standard with ads
(cheaper plan)"] SUB --> P3["Extra member fees
(paid sharing)"] SUB --> P4["Price increases"] AD --> A1["Ads on the ad plan"] AD --> A2["Live events
(sports, specials)"]

1. Subscriptions

Members pay monthly, and pricing varies a lot by country. Netflix grows subscription revenue three ways: more members, higher prices, and moving members between plans.

2. The Password-Sharing Crackdown

From 2023, Netflix started requiring households to pay for "extra members" or get their own accounts. Many people who had been borrowing a login started paying, which helped membership growth.

3. Advertising

The cheaper ad-supported plan attracts price-sensitive members, and Netflix earns from the ads shown to them. In 2025, its third year selling ads, Netflix said ad revenue more than doubled to over $1.5 billion, and it expects ads to roughly double again in 2026. Ads are still small compared with subscriptions, but they're the fastest-growing line.

4. Live Events

Live sports and specials bring in viewers at the same moment, which suits advertisers and helps keep members subscribed. (Live streaming at that scale is a hard engineering problem: see Why Netflix Rarely Goes Down.)

The Cost Side: Content

Key takeaway: Netflix pays for most content upfront, licensing or producing shows before knowing how they'll perform. That's the opposite of YouTube, which shares revenue with creators afterwards. Netflix's margins grow when revenue rises faster than its content spending.
Netflix YouTube
Content model Pays upfront for shows and films Shares revenue with creators
Main revenue Subscriptions Advertising
2025 revenue $45.2B $60B+ (ads + subscriptions)

Why the Model Works

  • Scale spreads costs: a show costs the same whether 10 million or 100 million people watch it, so more members means more profit per show.
  • Global reach: local-language hits (such as Korean, Spanish and Indian originals) travel worldwide.
  • Recommendations keep people watching what's already paid for.
  • Price power: a large library and well-known originals let Netflix raise prices with limited cancellations.

Frequently Asked Questions

How much money does Netflix make?

Netflix reported revenue of $45.2 billion in 2025, up 16% from 2024, with an operating margin of 29.5%. It forecasts revenue of $50.7 to $51.7 billion for 2026.

How much does Netflix make from ads?

Netflix said its ad revenue more than doubled in 2025 to over $1.5 billion, the first time it disclosed the figure. It expects advertising revenue to roughly double again in 2026, though ads remain a small share of total revenue.

How many subscribers does Netflix have?

Netflix said it crossed 325 million paid memberships during the fourth quarter of 2025. It has stopped reporting subscriber numbers every quarter, focusing instead on revenue and engagement.

Conclusion

Netflix makes money mainly from subscriptions, boosted by price increases, paid sharing and a cheaper ad plan, with advertising now its fastest-growing line. Its big bet is paying for content upfront and spreading that cost over 325 million-plus members, which pushed operating margin to 29.5% in 2025.

Sources

Last verified: 2 November 2026.

Related reads: Why Netflix Rarely Goes Down · How Does YouTube Make Money? · How Does Amazon Make Money?

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