This will be driven by eight million U.S. and Canadian subscribers in 2023 -- growing to 14 million in 2025.
By comparison, Netflix currently is projected to end this year with 73.2 million U.S. and Canadian subscribers to its subscription ad-free service, with 500,000 for its ad-supported option.
“Will Netflix's advertising-supported tier reignite subscriber growth within the key UCAN markets?,” asked Michael Nathanson, senior research analyst and co-founder. “We believe the answer is yes, although only moderately.” This will result in a 2% more subscribers next year -- after a 2% decline by the end of 2022.
MoffettNathanson Research projects the monthly price of the ad-supported service will be roughly half that of its current main subscription option -- around $7.99 a month.
Netflix's main subscription "standard" option is priced at $15.49 a month.
“The balancing act Netflix must carefully weigh is providing an entry price or initial discounted offer that attracts new subscribers to its ad tier, while at the same time not making it too attractive for existing subscribers of their two highest-priced plans to spin down to the cheaper package, offsetting the incremental advertising revenues,” says Nathanson.
Globally, Netflix is projected to pull in $2.7 billion from 39 million subscribers to the new service by 2025. Currently, Netflix is projected to end 2022 with 223.1 million subscribers worldwide.
MoffettNathanson anticipates worldwide advertising revenue to be $1 billion next year.
Industry reports and projections estimate that Netflix will run four minutes of advertising time per hour, priced at a massive at $65 for cost per thousand viewers (CPM).
MoffettNathanson predicts Netflix will see gross CPMs priced at $50 this year -- declining to $45 in 2023.