The reason is that if they didn't include ads they would have to raise prices substantially.
Also, a lot of people DON'T like commercial-free presentations. They want a convenient place to pause--especially on shows that are more than a half-hour.
Keep in mind that with HUNDREDS of channels available, it means MANY presentations have FEW people watching. They couldn't afford to have specialized cooking shows, oddball sports, etc., if in a particular market they only had 1,000 people watching AND the show didn't produce additional income in the form of advertising paid by local companies.