May 23, 2022
With Netflix planning to launch an ad-supported subscription option by the fourth quarter, a new report suggests the move could generate a 21% spike in the streamer’s annual revenue. The company reported $3.35 billion in North American fiscal 2021 revenue, which was up from $3 billion in FY 2020 revenue.
Netflix currently charges $9.99 monthly for the basic plan, $15.49 monthly for the standard plan, and a $19.99 monthly for the premium plan.
The Information, citing data from SVOD competitors employing ad-supported options, contends Netflix would have to charge less when subjecting streamers to targeted ads. How much less remains to be seen.
Assisting Netflix in the ad-revenue generation would be its scale of subscribers. The service currently has about 221 million subscribers, including 74.5 million in North America. That’s more than HBO Max, Paramount+, Discovery+ and Peacock combined.
Hulu reportedly subjects streamers to the most ads per hour, while Paramount+ streams 50% fewer commercials than Hulu, according to Paramount Global CFO Naveen Chopra speaking at a recent investor event. HBO Max streams fewer ads as well.
“[Ad-supported subscription streaming] gives us the ability to package what is becoming increasingly scarce linear inventory with digital video inventory, which is a way to differentiate that inventory versus what some other platforms will be able to offer,” Chopra said.