Netflix was late to the ad-supported side of the subscription streaming world, but it is quickly becoming a leader, boasting more people paying for the Netflix advertising-supported-subscription option than Peacock has total customers.

At its Upfront presentation to advertisers on Wednesday, the company’s president of advertising reported total subscriptions to the ad-supported plan had hit 40 million—a huge increase from the 5 million people it reported a year ago. That’s a 700% jump when many other streaming services were facing user churn—and it underscores Netflix’s dominance in the streaming world. (It’s unclear how many of those new ad-tier users have downgraded from more expensive plans or are new subscribers.)

To put the 40 million figure into context, the total number of Peacock subscribers stands at 34 million, while Apple TV+ only has an estimated 25 million subscribers.

Two of every five people who sign up for Netflix these days opt for the lower-priced ad-supported option where it is offered. And that’s spurring the company to launch an in-house advertising technology platform before the end of next year, which will give it not only more ways to measure the impact of those ads, but a higher percentage of the revenue from them. It currently partners with Microsoft for its ad services.

The ad-supported option on subscription streaming services lets consumers access the programming for a substantially lower cost. Netflix, for example, charges $6.99 for its ad-tier plan, while a subscription that bypasses commercials starts at $15.50 per month. Warner Bros. Discovery’s Max and Disney’s Disney+ also offer ad-supported tiers.

Ad-supported subscription tiers are growing across the industry. In the fourth quarter of 2023, the majority of gross subscriber additions opted for ad-supported plans for the first time, according to data from research firm Antenna. That number increased further in the first quarter of this year.

There’s lots of room for Netflix advertising to grow, too. Antenna data suggests just 40% of users have opted for the Netflix advertising-supported tier (something the company confirmed in its most-recent quarterly earnings), which is slightly more than those who opted for it on Max, but substantially below the percentage choosing it on Disney+, Paramount+, Hulu, or Peacock (where 79% of users opt for ad-supported).

That’s notable, as streaming customers have been questioning the value of their subscriptions of late. In March, Deloitte’s 2024 Digital Media Trends report found that 36% of Americans believed subscription video on demand wasn’t worth the price they were paying.

On average, American households spend $61 per month on streaming services, a 27% increase over last year’s average of $48 per month. And nearly half (48%) of the people Deloitte spoke with said they would cancel their streaming service, even their favorite one, if prices went up by $5 per month or more.

Netflix has made some adjustments to its ad-tier since its launch. Earlier this year, for instance, it began rewarding binge watchers of its programming, presenting an ad-free episode after they’ve watched three previous ones in a row. And as Netflix adjusts its programming strategy, even customers who pay for an ad-free subscription are likely to run into a few commercials in the years to come.

The company has signed a deal with the NFL to stream two Christmas Day games starting this year. And commercials are built into those broadcasts, regardless of subscription options. It’s unclear at this point if the company’s live broadcasts of WWE programming, which will start next year, will carry ads.

Despite the initial resistance for ads on a subscription streaming service, many users say they don’t mind them now—and would like to interact further with them. In Deloitte’s study, nearly 40% of consumers under 41 years of age said they would like the ability to click on the advertisements they watch.

“Streaming providers—and all media and entertainment companies—could learn from social media and content creators,” Deloitte wrote. 

Correction, May 18, 2024: An earlier version of this article misstated the number of Netflix users who were on the ad-supported tier last year. It was 5 million.