How Will New Ad-Supported Tiers Affect The Streaming Industry?

With the announcement that streaming platforms such as Netflix and Disney+ will release (or already have released) a new ad-supported tier, this will undoubtedly impact the streaming industry as a whole. But what might these new ad-supported tiers mean for the future of the streaming industry? Let’s take a look.

Source: Frontstream

The shift to advertisement-based video on demand (AVOD)

If this is the first time you’re hearing about these new ad-supported tiers, let’s first break it down.


As you are probably aware, Netflix and Disney+ initially offered subscription-based video on demand (SVOD) services that allowed users to stream films and TV shows without advertisements for either a monthly or annual subscription. These types of streaming services are incredibly popular, with SVOD global revenue forecasted to amount to $132 billion by 2027.

However, despite their prominence, Netflix itself suffered a loss earlier this year, which some analysts believe led to the creation of their ad-supported tier – Netflix Basic, with ads – to attract potential customers. With the current cost-of-living crisis and inflation soaring, it may have been a genius move on Netflix’s (and eventually Disney+) part to introduce this cheaper tier at £4.99 per month to the mass audience.

Nonetheless, they’re not the first platforms to do this – HBO Max and Hulu offered AVOD before Netflix and Disney+.

So, how will these tiers affect the streaming industry?

Firstly, the move makes AVOD much more attractive, especially since Netflix is arguably the powerhouse of the streaming industry. This may entice other platforms to follow in its footsteps, bringing forth the rise of AVOD services.

Consequently, this provides more opportunities for advertisers to produce and place ads on these platforms, which in turn could generate increased revenue for the streaming industry. Whilst SVOD services primarily relied on subscription fees for profit, AVOD models can now also depend on ad revenue for earnings. As a result, you can probably expect to see DSP advertising flourishing.

The future of streaming services

AVOD services will definitely transform the way that we will stream content – we’ve familiarised ourselves with watching a variety of shows and films without ads, but now we’re shifting back to a traditional viewing of TV. Netflix’s Basic, Standard and Premium plans cost £6.99, £10.99, and £15.99 per month respectively. And, although they do come with extra benefits, are they worth watching content without ads – especially in the current economic climate?

Ads on Netflix are said to only last 15 to 30 seconds, with a frequency cap to ensure that viewers aren’t watching the same ads too often. In an age where we’ve been privileged enough to spend a few years streaming without ads, we can probably stomach watching ads to watch our favourite content to save some money.

It’s worth noting that it’s expected that approximately 60% of Netflix subscribers (both new and current) will have joined their ad-supported tier by 2027, showing that not only is there a change in the options for streaming, but also that perhaps AVOD will dominate the industry by 2030.

And there you have it – all the basics, predictions and insights you need to know about how ad-supported services will affect the streaming industry.

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