Netflix’s new ad-tier model will generate more money from Western Europe than the US by 2027, predicts Ampere Analysis.
A new report has projected that Western Europe will produce annual advertising revenue of $1.9bn for Netflix while the US will produce $1bn. Globally, the ad-supported subscriptions are expected to rake in $2.2.bn more for the company than if it continued with just subscription-only plans.
The streaming platform’s new ad-supported tier, in partnership with Microsoft, is due to launch early 2023. The announcement came in the wake of the company’s Q2 results which saw a loss of 200,000 subscribers, Netflix’s first loss in over a decade.
Average revenue per user (ARPU) will also be 4.9% than it would have been without ad-tier model, according to Ampere.
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By 2027, around one in five Netflix users in Western Europe are expected to be on an ad-supported subscription, with subscribers of this plan estimated to grow by 1.8% more than those on subscription-only.
Ampere predicts customers overall will be 3.2% higher than without an ad- tier option.
Analyst at Ampere Analysis Ben French said: “Very strong advertising rates for streaming in Western Europe will contribute to a significant uplift in the value per customer for those taking the ad tier. Although the overall boost to subscriptions is predicted to be modest in the region, this increased customer value will see Western Europe exceed the value of the US market by 2027.”
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