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Fresh analysis suggests that the ad revenue for the American streaming market will near $17 billion in 2025.
Ampere Analysis has predicted that the market will hit this milestone in ad revenue, at the same time as streaming services like industry giant Netflix are scaling quickly. 2024 saw Netflix end the year on a high with 19 million new subscribers in the final quarter.
Although Netflix first started an ad-funded tier back in 2022, users weren’t automatically enrolled in it until 2024. Ampere also found that ad-funded VOD (video-on-demand) services, alongside social video services like YouTube, are increasingly able to compete with titans like Netflix.
YouTube in particular has been pushing to make its name in entertainment streaming, rather than user-generated social content, by commissioning its own shows and even films through enterprises like the erstwhile YouTube Red, which would become YouTube Premium.
The economics of streaming
Ampere’s research is backed by other studies looking at the streaming industry. In its October Growth industries and The Next Big Arenas of Competition report, McKinsey labelled ads “the new revenue multiplier.”
With global pressure on the cost of living, subscription-based revenue is not an area major brands can rely on in the same way they could during the pandemic, for example. Within three years, PwC predicts that advertising will account for around 28% of global streaming revenues, an increase from just 20% in 2023.
On the other hand, Amazon is backing away from ads, cancelling its ad-funded Freevee tier and requiring users to subscribe to Prime Video for access to its titles. That highlights how there appears to be no one rule for the streaming platforms, considering 44% of Freevee viewers in the US were (as of November) not subscribers to Prime Video.
“In the context of the wider subscription market slowdown, this represents a significant opportunity for Prime Video to target and sign-up new subscribers,” explained Ampere’s Orina Zhao.
Featured image: Midjourney
