- Netflix and Disney+ are set to introduce ad-supported subscriptions.
- Netflix will launch an ad-supported subscription tier in early November, a month before Disney+.
- Netflix and Disney look towards continued expansion with this move.
Netflix and Disney+ are expected to lower the revenue of standard television channels by introducing less expensive, ad-supported subscriptions as the streaming services intend to keep expanding.
Although Netflix initially rejected the idea of advertisements on its platform, it has accepted and is actively pursuing the concept. This decision results from consumers’ reduced spending due to inflation and the escalating competition in the streaming television industry.
According to US media reports, Netflix will introduce an ad-supported subscription tier in early November, approximately a month before rival Disney+ does the same.
Netflix and Disney+’s ad-supported subscriptions will be a major development for advertisers
According to Dallas Lawrence, senior vice president of analytics company Samba TV, these launches will create the largest premium advertising space in over a generation. He stated, “It will be a major moment for advertisers.”
Reaching Netflix or Disney+ subscribers enables marketers to re-engage with consumers who have shifted away from traditional “linear” television in favor of streaming media, according to Colin Dixon, chief analyst and founder of nScreenMedia. “This actually gives advertisers access to people who they haven’t been able to reach in a while, in their most focused viewing time,” Dixon said.
There may also be a sizable profit for Disney+ and Netflix. According to market researcher Statista, global revenue from television advertising is expected to reach $171 billion US dollars in 2022.
“Not long ago, everyone said subscriptions would kill ads,” stated Kevin Krim, head of marketing analytics firm EDO. “Now, we can see that is obviously not true.”
A few streaming television services already offer ad-supported content, including NBCUniversal’s Peacock, Paramount+, and HBO Max.
The future of Netflix and Disney+
According to an internal memo cited by the Wall Street Journal, by the third quarter of the next year, Netflix hopes to sign up at least 40 million people for its ad-supported tier.
Disney+ has also stated that when the time comes, the company will switch from its current $7.99/month subscription rate to the ad-supported version, with the ad-free alternative costing $10.99.
Analysts have predicted that by entering into the advertising sector, Netflix and Disney+, which have 220 million and 152 million users, respectively, might attract the attention of companies looking to advertise to television audiences.
New advertising models could be developed by Netflix and Disney+, defying standard guidelines about the duration and placement of advertisements. They also have the chance to involve partners in the development of programs.
So far, streaming television services do not appear to threaten the digital advertising market, especially the revenue of companies like Amazon, Google, Facebook, or TikTok. However, according to analyst Benes, advertisers are increasing their overall budgets to reach consumers online.
