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Netflix, Disney Poised to Shake Up TV Ad World

PUBLISH DATE: 27 September 2022

With the emergence of cheap, ad-supported subscriptions, Netflix and Disney+ are very much expected to take a bite into the revenue of traditional television channels as the streaming services look toward continued expansion.

Netflix this year, accelerated work on advertising and offering as inflation prompts consumers to spend less and competition in the streaming television market escalates.

According to some US media reports, Netflix is expected to launch ad-supported subscription services in early November. This news came a month before rival Disney+ does the same.

“These launches are extremely critical and will create the biggest premium advertising space in more than a generation”, said analytics company Samba TV senior vice president Dallas Lawrence. He further added that it’s going to be a major moment for advertisers.

The bonanza for Netflix and Disney+ could be considerable. Statista, a German company specializing in market and consumer data forecasted that spending on television ads will hot $159 billion globally this year.

Research has also estimated that advertising revenues from streaming could reach $30 billion in two years in the Unites Stated alone.

In the year 2021, global video sharing and online television platform YouTube saw $28.8 billion in ad revenue.

Kevin Krim, head of marketing analytics talking about this said, “Not long ago, everyone said subscriptions would kill ads.”

Image the scenario of a Disney+ subscription, there is no doubt here that a subscription of Disney+ with advertising would tempt marketers with the potential for ads to be served with smashing hot content such as its “Star Wars” franchise.

Besides Netflix, and Disney+ there are some other streaming television services such as NBCUniversal’s Peacock, Paramount+ and HBO Max who already feature ad-supported offerings.

But Netflix and Disney+—with 220 million and 152 million subscribers respectively – steeping a leg in the advertising ring could catch the attention of businesses interested in reaching television audiences like never before.

As per an internal document cited by Wall Street Journal, Netflix is looking forward to win over no less than 40 million subscribers to its ad-subsidized tier by next year’s third quarter.

And when the time comes, Disney+ will make a transition of its existing $7.99-per-month subscription tier to the ad-supported version, and the ad-free option will go for $10.99. The company has confirmed the same for this transition.

A Big Threat is Coming to Old-Time TV

Being able to reach Netflix or Disney+ viewers is a promising platform for brands to reconnect with audiences that have abandoned traditional “linear” television in favor of streaming entertainment which is at its highest peak now.

Being able to reach Netflix or Disney+ viewers promises to help brands reconnect with audiences that have abandoned traditional “linear” television in favor of streaming entertainment, said

“This gives advertisers access to consumers whom they haven’t been able to reach in a while, at the moment when they are most focused and will engage,” said nScreenMedia chief analyst and founder Colin Dixon.

It doesn’t matter when viewers with ad-based subscriptions choose to watch a show or film, the commercials will there, waiting eagerly for them.

Netflix has a huge potential to woo advertisers with its variety of hit original shows such as ‘Stranger Things’ in an ad-subsidized subscriptions tier.

It will also offer advertisers the luxury of placing ads directly with Netflix or Disney+ for viewers all around the world, rather than go through the trouble of negotiating deals with channels or stations in various regions.

But these new subscription tiers will put immense pressure on linear television service providers who have not yet taken the streaming game seriously and have been keeping it to implement later on.

In addition to reaching viewers wherever and whenever they stream television shows, ads on Netflix or Disney+ provide marketers with more data than is available. Television ads on streaming platform can also be targeted at individual viewers.

Netflix and Disney+ have a chance to create new advertising models and to break long-held norms about length of the advertisement or its placement.

So far, streaming television do not seem a threat to digit ad revenues for companies like Amazon, Facebook, Google or TikTok, with marketers looking forward to expand their overall budget for reaching their consumers online.