Exclusive: Netflix’s advertising tier to raise $7bn by 2027

Netflix’s soon-to-launch ad-tier will raise $7bn and account for 66% of subscribers by 2027, according to exclusive research from analyst powerhouse Omdia.

The streamer confirmed last week that the service would be rolled out into 12 countries from 3 November, with prices ranging from $6.99 in the US to £4.99 in the UK.

Research revealed today shows the extent of growth this tier is expected to experience, with Netflix predicted to see just under half of its subscribers taking the ad-supported option by 2025. This will then grow to 55% in 2026 and to 66% a year later.

While advertising will contribute 4% of revenue next year, that will climb steadily to almost 15% by 2025 and just under 22% by 2027.

Disney+, which is launching its ad-supported tier on 8 December for $7.99, is predicted to see the uptake of its ad tier grow even further than arch-rival Netflix.

Omdia predicts the percentage of total subscribers for the ad tier will rise from 25% next year to more than 50% two years later, growing to three-quarters of all customers by 2027. The streamer itself has previously admitted that it expects around 70% of its customers to switch ti the new tier.

The full findings will be presented at a MIPCOM presentation later today from Omdia’s Maria Rua Aguete and underline the change facing the streaming market.

Both Disney and Netflix, which has said it will run four or five minutes of ads per hour, will face challenges as they ensure programming does not clash with advertiser messaging.

Senior execs have suggested to TBI here at MIPCOM that the introduction of advertisements will cause a rethink in the types of programming being commissioned, as streamers once used to only catering to viewers must now also ensure that same content fits with marketers’ demands.