Netflix leads in ad revenue per viewer, but competitors are closing the gap

Despite remaining the leader in ad revenue per viewer, Netflix is set to experience a narrowing gap as competitors catch up. According to recent forecasts from eMarketer, Netflix’s ad revenues per ad-supported viewer in the US are projected to decline from $70.44 this year to $59.67 by 2026. Nevertheless, Netflix will continue to generate more ad revenue per viewer than any other streaming service through the end of this forecast period.

Netflix’s ability to generate higher ad revenue per viewer can be attributed to its extensive and engaging content library, sophisticated ad targeting, and strong brand loyalty. This year, the streaming giant is expected to generate 53.6% more ad revenue per ad-supported viewer than Hulu, highlighting its superior monetization strategies. However, it’s worth noting that Hulu boasts six times more ad-supported viewers in the US, translating to connected TV (CTV) ad revenues more than four times those of Netflix.

The competitive landscape in the streaming industry is intensifying. With Amazon introducing ads to its Prime Video service, the pressure on Netflix is mounting. The entrance of Amazon, with its vast resources and established customer base, adds a formidable player to the ad-supported streaming arena. This move is likely to attract advertisers looking for alternative platforms, thereby increasing competition for ad dollars.

Interestingly, Apple TV+ remains the largest streaming platform yet to adopt an ad-supported model. As the market dynamics evolve, it will be intriguing to see whether Apple will eventually introduce ads or continue to rely on its subscription model. The absence of ads on Apple TV+ may attract viewers seeking uninterrupted content, potentially creating a niche market segment.

The projected decline in Netflix’s ad revenues per viewer signifies a need for strategic adjustments. Netflix may need to explore new content partnerships, enhance its ad tech capabilities, and offer more attractive packages to advertisers. Additionally, the platform could benefit from leveraging data analytics to provide more personalized and effective ad experiences, thereby maintaining its competitive edge.