Netflix is poised to outperform Disney+ in U.S. advertising revenue by 2024.
A comprehensive report from Insider Intelligence outlines the reasons behind this anticipated change in the market dynamics.
Netflix's ad revenue is projected to surge by 50.3%, reaching approximately $1 billion in 2024.
This notable increase can be attributed to the platform's strategic moves: Higher subscription prices and a firm stance against password sharing.
These measures are driving more users toward Netflix's ad-supported membership tier.
Conversely, Disney+ is expected to see more modest growth in its U.S. advertising revenue, estimated at 16.1% to reach $912 million next year.
"Netflix can sell ads at a higher price than other streamers due to pent-up demand for its ad tier," explains Ross Benes, an analyst at Insider Intelligence.
Viewer Engagement Cast as the Lead
Benes emphasizes the importance of viewer engagement in this revenue shift.
"Viewers tend to spend more time per day with Netflix than with other streaming services, which positions Netflix's ad revenues for significant growth," he said.
In contrast, Disney's struggles in ad revenue are partly attributed to recent box-office disappointments.
Currently, around 5% of Netflix's U.S. subscribers encounter advertisements, compared to a higher 17% for Disney+.
These percentages are expected to change in 2024, with approximately 7.5% of Netflix subscribers and 20% of Disney+ subscribers projected to see commercials.
Reflecting these developments, Netflix shares have witnessed a remarkable increase of 56.2% year-to-date, while Disney shares have risen by 3.4%.