Netflix turned around and pulled a surprise move after collecting a $2.8 billion breakup fee from Paramount Skydance for stepping aside in the bidding war for Warner Bros Discovery — rolling out price increases across all of its streaming tiers in the United States.

With its one-time cash windfall, the streaming giant arguably chose a moment to hike subscribers’ monthly bills in a way that would makes it look greedy. That said, the price hikes actually point to something more strategic going on.

For Netflix, the name of the game is now make its ad-free plans more expensive, while barely touching the ad-supported streaming tier. At the risk of oversimplifying things, here’s why: The company wants to make the ad-supported tier more attractive over time, because that ad-supported tier gives Netflix a kind of double payday. (The subscriber pays, and so does the advertiser.)

Netflix executives have also said they expect ad revenue to climb sharply this year, which certainly isn’t a bad thing with around $20 billion in content spending already on the books.

Netflix raised the price of its ad-supported plan to $8.99 per month, an increase of just $1. For the rest of its plans, the hike was steeper. The ad-free Standard plan got a $2 bump to $19.99, and the Premium 4K plan likewise rose $2 to $26.99. Extra member add-ons also increased on the ad-free plans. The result is a widening gap that makes the cheapest plan look like a much more attractive purchase compared to the others.

It’s not so much a straightforward chase for profit as it is a nudging of customer behavior toward a specific direction. And with more than 325 million global subscribers, along with the rich trove of data that subscriber base produces, it’s a calculated push the streaming giant likely has plenty of justification for.

Netflix has, of course, gambled over the years on several such company-wide shifts, such as the transition from DVDs to streaming. But consider, too, the streaming industry writ large.

According to Comscore, Netflix’s ad-supported tier now accounts for a little less than half of U.S. household viewing hours (45%), a 34% increase from a year earlier. And its rivals are following a similar path.

Peacock, Max, Paramount+ and Disney+ are all similarly widening the pricing gap between their own ad-supported and ad-free tiers.

In a sign of how important this streaming play has become, Amazon has even gone a step further. In 2024, it turned on ads for every Prime Video user by default and made removing them available for a surcharge (sparking, justifiable in my opinion, a bit of an outcry). Of the big streamers, Apple TV is currently the lone holdout when it comes to remaining ad-free, though that might only be a matter of time at this point.

It’s not like the iPhone maker is running away from ads. Just days ago, it announced a push that entails letting businesses place local ads in the Apple Maps app “during key search and discovery moments.”

Back to Netflix, it’s evolved from a grow-at-all-costs disruptor to the king of the streaming hill.

With the latest round of price hikes, Netflix is making its strategy crystal clear. Ads, for better or worse, are the future.

And, again, it’s not just Netflix. Across the industry, streaming has entered its profitability era, and this push of customers toward ads is only going to grow stronger. For those customers, the signal is subtle but getting harder to miss. Ad-free viewing might sooner than later feel like a luxury, while the ad-supported experience looks increasingly more attractive — and, for many, good enough.

This article was originally published on Forbes.com