Netflix Estimated To See $1.7 Billion In Ad Revenue By 2025: Analyst

Netflix is now expected to pull in $700 million in U.S. and Canada advertising revenue, growing to $1.7 billion by 2025, driven by its new, ad-supported service set to launch by the end of this year, according to MoffettNathanson Research -- higher than its previous estimates.

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.

1 comment about "Netflix Estimated To See $1.7 Billion In Ad Revenue By 2025: Analyst".
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  1. Ed Papazian from Media Dynamics Inc, October 4, 2022 at 11:53 a.m.

    We ran the numbers for our MDI Direct subscribers recently and it all depends on whether Netflix is able to motivate advertisers to spend premium CPMs to potentially reach very small average minute audiences who look, more or less like the total population, demo-wise.  Moreover, they are saying "trust us" regarding audience measurement and most, if not all, of the commercials will be in pre- or post-roll positions, not in-show breaks---not good for attentiveness. Add to that, the demand that buyers have virtually no say in what programs their spots appear in---what happened to "targeting"?--- and that Netflix ---as yet---does not have a national TV -experienced sales and packaging staff that the buyers have confidence in and it's all very problematic to say the least.

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