While Netflix global advertising revenue is estimated to more than double to $4 billion in 2025, revenue per member for its ad tier is not expected to grow at a commensurate level compared to its ad-free subscription tier anytime soon, according to Bernstein Research.
There have been only modest gains in the "effective" advertising cost-per-thousand viewer price (eCPM), writes Laurent Yoon, media analyst at Bernstein.
eCPMs are projected to rise slightly to $22.05 in 2025 (up from $21.00 in 2024). The eCPM is the "delivered CPM" -- not the agreed-upon price paid by the media brand, Yoon says.
Yoon sees Netflix’s overall ad-tier as a slower-growth business.
“With our base case assumption of 5% [growth rate] on effective CPM and flat average consumption per subscriber, we don’t expect that ARM [advertising revenue per member] gap between the AVOD tier and non-AVOD tiers to close in the foreseeable future.”
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For Netflix, the derived average U.S./Canada advertising revenue per member was an estimated $10.22 in 2024 -- expected to increase to $10.73 in 2025.
Total revenue per membership --advertising and subscription -- for Netflix’s "Standard With Ads" plan amounted to $17.21 last year -- and is expected to grow to $18.72 this year.
Netflix's new subscription price for AVOD is $7.99/month -- up 14%, compared to $6.99 in 2024.
Broader projections for the U.S. and Canada estimate domestic advertising will reach $2.9 billion this year -- more than double the estimate of $1.3 billion in 2024.
Netflix is expected to see a 70% gain of AVOD members in 2025, to around 27.9 million, compared to 16.4 million in 2024. That will mean advertising subscriptions will be 30% of its total number of U.S./Canada subscribers -- 94 million.
“While AVOD helps to drive subscriber growth and generates additional advertising revenue, it’s still dilutive to the overall ARM [advertising revenue per member],” Yoon says. “Based on our estimates, ARM for the AVOD tier in UCAN is $17.21 in 2024, which is lower than the average price of [Netflix’s] Standard and Premium tiers.”