Netflix and Disney+ are anticipated to reduce the revenue of conventional television channels with the introduction of less expensive, ad-supported subscriptions as the streaming services want to continue growing.
Netflix will introduce an ad-supported membership tier in early November
As consumers cut back on their spending due to inflation and as competition in the streaming television industry heats up, After previously dismissing the idea of advertising on its platform, Netflix has accelerated work on such an offering this year.
According to US media reports, Netflix will launch an ad-supported subscription tier in early November, about a month before rival Disney+.
“These launches are going to create the biggest premium advertising space in more than a generation,” said analytics company Samba TV senior vice president Dallas Lawrence. “It’s going to be a major moment for advertisers.”
Advertising revenues from streaming could reach $30 billion in two years
The benefits to Netflix and Disney+ could be substantial. Statista predicts that global spending on television advertisements will reach $159 billion this year.
According to Insider Intelligence analyst Ross Benes, advertising revenues from streaming could reach $30 billion in the United States alone in the next two years.
YouTube, a global platform for video sharing and internet broadcasting, generated $28.8 billion in ad revenue in 2021. According to Kevin Krim, CEO of the marketing analytics company EDO, “Not long ago, everyone said subscriptions would eliminate ads.” Now, it is clear that this is untrue. A few streaming television services already offer ad-supported content, including NBCUniversal’s Peacock, Paramount+, and HBO Max.
By the third quarter of the next year, Netflix hopes to sign up at least 40 million people for its ad-supported tier, according to an internal memo quoted by the Wall Street Journal.
The firm has stated that when the time comes, Disney+ will switch from its current $7.99/month subscription rate to the ad-supported version, with the ad-free alternative costing $10.99.