By: members of the MMWW team: Warren Howe Jennifer Smith Daniella Matias Grant Mayse


A Quick Look at the Numbers

  • Netflix and Disney rolled out ad-supported tiers in their streaming services in late 2022, and Amazon Prime Video joined the party in Q3 2023 when it announced it would launch an ad tier in early 2024. This means that, in a span of 18 months, three major streaming services that were previously ad free will have plenty of inventory to satisfy pent-up demand from advertisers.


  • Streaming ad prices will continue to align/come together. When Netflix and Disney+
    launched their ad tiers, they asked for what many in the industry considered unrealistically high prices. Since then, they’ve fallen closer in line with incumbents Peacock and Hulu. Early reports suggest Amazon is taking a different approach, with a target cost per thousand (CPM) of about $36, which is around the middle of the pack among major streaming services.


  • One-third of streaming subscriptions will become ad-supported as more people sign up for those tiers. In 2023, an estimated one-quarter of US premium subscription
    video-on-demand (SVOD) customers are on ad-supported plans, according to Antenna. That percentage could easily rise to one-third within a year. In an October 2023 letter to shareholders, Netflix reported that its Q3 2023 ad-supported sign-ups were up nearly 70% from Q2, and that 30% of new sign-ups in countries where it offers an ad tier were for the ad-supported product.


  • Free ad-supported streaming TV channels (FAST) are adding viewers and growing their revenues. By 2027, nearly one-third of the US population will view these services, which include The Roku Channel, Tubi, and Pluto TV (the last two owned by Fox and Paramount Global, respectively). Amazon-owned Freevee is also in the mix. Roku, Pluto TV, and Tubi are expected to grow their ad revenues by double digits in 2024.


A New Era of Streaming Advertising

The streaming landscape is undergoing a significant transformation with the introduction of ad-supported tiers by major platforms. This shift represents a pivotal moment for advertisers, content creators, and consumers alike, as it opens up new opportunities for engagement within premium streaming environments. Here’s how this evolution could reshape the media landscape and what it means for various stakeholders.

With Netflix, Disney+, and Amazon Prime Video embracing ad-supported models, the streaming industry is poised to offer abundant inventory for advertisers. This move is a clear response to the growing demand for more cost-effective access to premium content, and it signifies a broader acceptance of advertising within platforms that were once ad-free havens. The pricing strategy for these ad slots, initially considered high, is finding its balance, making streaming ads an increasingly attractive option for brands.

The Democratization of Premium Content

The introduction of ad-supported tiers is democratizing access to premium streaming content. As these services become more accessible, advertisers gain opportunities to reach wider and more diverse audiences. The significant uptake in ad-supported subscriptions, as indicated by Netflix’s surge in sign-ups and the projected increase in consumers opting for these plans, underscores a shift in viewer preferences towards more economical streaming options.


Leveraging the Shift for Strategic Advantage

● Advertisers: For advertisers, this shift offers a golden opportunity to tap into a captive audience in a premium environment. Although there is a hefty minimum spend requirement, with the integration of ad-supported tiers, brands can

– Target Niche Audiences: Leverage advanced targeting capabilities offered by
streaming platforms to reach specific demographics, interests, and behaviors

– Enhance Brand Safety: Position brands alongside premium, curated content,
enhancing brand safety compared to the open internet.

– Maximize Impact with Creative Storytelling: Utilize the immersive, high-quality
streaming environment to deliver compelling, narrative-driven advertisements that
resonate with viewers.

● Content Creators: Content creators stand to benefit from expanded distribution
opportunities and potential revenue streams:

– Wider Distribution: The ad-supported model can increase content visibility and
accessibility, attracting a broader audience.

 – New Revenue Avenues: Partnering with advertisers for branded content or
sponsorships can open additional revenue streams beyond traditional subscription

● Consumers: Consumers gain from this evolution through:

–  Increased Access to Premium Content: The ad-supported tiers provide more
affordable options for accessing high-quality streaming content.

– Personalized Viewing Experiences: Ad targeting can lead to more relevant
advertisements, enhancing the overall viewing experience.


Navigating the Future

As the streaming landscape continues to evolve, stakeholders must remain agile, embracing the opportunities and challenges this shift presents. Advertisers should refine their strategies to engage with audiences in meaningful ways, leveraging the unique attributes of streaming platforms. Content creators can explore innovative partnerships and content models to capitalize on the expanded audience base. Consumers, equipped with more choices, will play a pivotal role in shaping the future of streaming content consumption and advertising preferences