Despite the Basic With Ads subscription tier being released just two weeks ago, we’re forecasting Netflix will see US ad revenues of $830 million in 2023, growing to $1.02 billion in 2024. It’s an impressive acceleration in ad revenues, but it puts the company behind a few streaming rivals.
The competition: According to our forecast, Disney+, which is set to launch its ad-supported tier on December 8, will have slightly higher US revenues next year at $1.02 billion, growing to $1.19 billion in 2024. The Walt Disney Co. already had an ad infrastructure through Hulu and ESPN+, while Netflix had to build one from scratch.
Hulu will see $4.25 billion in US ad revenues in 2023, further evidence of the ad revenue opportunity for Netflix if the company can capitalize on it.
Netflix is still in flux: The platform needs to sell brands on advertising without detracting too much from its subscription revenues.
- Netflix’s penetration, which will reach 50.7% of the US population in 2023, is much higher than Hulu’s 38.5%. That doesn’t necessarily mean more ad dollars, since almost all of Netflix’s subscribers are currently not seeing ads.
- Almost half of frequent Netflix users are interested in an ad-supported tier, according to a May Morning Consult survey.
- Netflix has set up infrastructure to capitalize on interested viewers. Ahead of the launch, it partnered with DoubleVerify, Integral Ad Science, and Microsoft to build out its data measurement and ad service capacity, and Nielsen’s Digital Ad Ratings will be available to Netflix’s advertisers next year.