Netflix’s blossoming advertising business is helping to retain customers who feel priced out of various cost adjustments made by the streaming service over the past few years, allowing them to continue to enjoy Netflix’s deeply-curated catalog of TV shows and movies at a lower price point if they’re willing to watch short commercial breaks.
That may be better for consumers than it is for Netflix’s bottom line.
According to new data from eMarketer, Netflix’s advertising revenue per ad-supported subscriber (a metric The Desk is calling AD-ARPU) is expected to drop from just over $70 per subscriber this year to slightly north of $59 per subscriber by 2026.
Despite the slowdown in revenue, Netflix is still forecasted to pull ahead of other general entertainment streaming services this year, including Hulu (around $43 AD-ARPU), Disney Plus (around $36 AD-ARPU) and Max (around $29 AD-ARPU).
While Netflix might claim the lion’s share of advertising revenue per subscriber, Hulu will have six times as many viewers watching content with ads, and Hulu’s connected TV advertising revenue will be four times larger than Netflix, according to eMarketer.
One reason? Hulu couples itself with two of Disney’s other streaming service — Disney Plus and ESPN Plus — and also retains sports-hungry subscribers with a live TV service that offers free access to the ad-supported tiers of all three video on-demand services.
While Netflix is offered as a bundle with other streaming services — Verizon’s Plus-Play marketplace offers Netflix as a bundle with at least one other service, while Comcast’s Stream Saver couples Netflix with Apple TV Plus and its own Peacock for $15 per month — all of these bundles exist outside of Netflix’s own ecosystem, while Disney controls all aspects of its bundles.
