Ad-supported streaming is the key battleground between the big TV and movie streamers, and Netflix appears to be winning the fight.
According to the streaming giant's advertising president Amy Reinhard (per Variety), Netflix's Basic with Ads tier had attracted eight million more subscribers by late 2023. That means the world's best streaming service's ads-supported subscription figure has rocketed to a whopping 23 million users, which accounts for almost 10% of its entire fanbase.
Speaking at Variety's entertainment summit at CES 2024, Reinhard also suggested that 85% of viewers who are signed up to Netflix's ad-based plan were streaming more than two hours daily. Those numbers are likely to increase further, too, with T-Mobile's Netflix on US program now gifting a free Netflix with Ads account to any new customers (NB: T-Mobile's Netflix deal had previously bundled the streamer's non-ad-supported subscription with its mobile contract plans).
Netflix has been aggressively pushing its Basic With Ads service ever since it made its ad-supported tier announcement in June 2022. Just five months later, Netflix's ad-based subscription option was made available in numerous territories, and it's gone from strength to strength since. Indeed, with Netflix's ad-supported tier getting new perks, such as the ability to download TV shows and movies onto your device of choice, it's even phased out its cheapest ad-free plan in the US.
Why 2024 will be the year of ad-supported streaming
Netflix isn't the only big streamer with an ad-supported tier, with rivals Disney Plus, Hulu, and Max all introducing ad-based plans since Netflix initially led the charge.
But 2024 is expected to be the year when streaming giants really start to battle for the most ad-supported customers and, from an income perspective, the most cash from advertisers. As we reported in September 2023, Amazon is also set to introduce ads to its Prime Video streaming platform, with the e-commerce giant bringing ads to Prime Video in late January. Well, in the US – the UK will follow suit on February 5, with Australia getting them sometime this year.
The arrival of ads on Prime Video is a big deal for Amazon, too, with the megacorporation predicting 115 million people will see advertisements when they stream the best Prime Video movies and best Prime Video shows around. The introduction of ads on Prime Video has already drawn criticism from some, though, especially in light of Amazon reportedly laying off hundreds of employees ahead of its ads-based event.
That won't matter to Amazon, though. Speaking to Digiday, third-party analysts say the market is changing as more premium streaming becomes ad-supported: Hulu and Peacock are currently considered the best places for advertisers, with Disney Plus and Max coming in slightly behind. Netflix and Paramount Plus are also bubbling away nicely.
One of the big questions hanging over 2024, however, is about advertisers' budgets. According to Digiday, "every agency executive interviewed for this article cited an extreme level of budget volatility at the moment that could affect how much money is spent on streaming." That could make streaming ads less lucrative – they currently command a premium over much traditional TV – but could also mean serious money goes to the streaming giant who can deliver the best targeting and viewer data.
One thing that is clear is that ad-funded streaming isn't going away. It's moved from the periphery of the business to its very centre, and that means the future of online TV is ironically starting to look a lot like its cabled past.
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