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Analysis: Disney+, Netflix to Reach $1B with Ad-Supported Streaming

Joshua Thiede

While it has been a bit gloomy for streaming services recently, especially following Netflix’s first quarterly subscriber decline in a decade, a recent study from research firm MoffetNathanson shows that Netflix and Disney+’s upcoming forays into ad-supported streaming will be quite beneficial. Analyst Michael Nathanson projects an increase in Netflix revenue by $1.2 billion and Disney+ may see an increase of up to $1.8 billion by the year 2025.

Nathanson examined the differences between the two streaming services, noting the larger worldwide opportunities for Netflix, while stating that Disney+ has an edge in the advertising sphere as its parent company already has that infrastructure in place. Alongside a lower starting revenue per user (RPU), the House of Mouse is more likely to make greater gains in the future.

The report also looks at expected price points for both services. Nathanson thinks that Netflix might set its ad-supported tier at $6 per month — $4 cheaper than its current Basic plan. By 2025, Nathanson sees the streamer drawing 15 million new subscribers in the United States and 75.6 million worldwide with its lower-cost, ad-based service. A report from The Information last month projected similar growth for Netflix.

According to the report, Disney+ should start its newest tier at $7.99 per month initially, but he sees the media giant raising the cost of ad-free subscriptions at the same time, something that The Streamable speculated about last month. Subscribers will see five 30-second ad spots each hour as opposed to Netflix’s proposed six per hour on its subscription plan. Currently, the streaming giant does not plan to air ads mid-content.

When looking at existing ad-supported streamers, Nathanson also projects profit increases in Hulu, HBO Max, discovery+, and Peacock as well. Ad-based revenue may be the deciding factor in maintaining a successful streaming presence in the years to come, especially for platforms that don’t rely on live news and sports to draw additional viewers to their services.

Nathanson concluded his report with a take on investment opportunities that ad-based streaming might offer. While profitable on paper, the analysis reinforced a neutral rating on each company’s stocks as there is still uncertainty as to how Disney+ and Netflix will proceed, including assessing their libraries to ensure that available content is suitable for different types of advertising partners. Even though ad-supported streaming options project immense profits, reality may curb dividends if services struggle with implementation.

  • Netflix

    Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.

    Netflix offers three plans — on 1 device in SD with their “Basic” ($9.99) plan, on 2 devices in HD with their “Standard” ($15.49) plan, and 4 devices in up to 4K on their “Premium” ($19.99) plan.

    Netflix spends more money on content than any other streaming service meaning that you get more value for the monthly fee.

  • Disney+

    Disney+ is an ad-free video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages.

    The Disney streaming service costs $7.99 / month, or $79.99 / year ($6.67 / month). You can bundle it with Hulu and ESPN+ for just $13.99 a month (cheaper than Netflix).

    The app supports unlimited downloads, four simultaneous streamers, up to 7 profiles, 4K streaming, and includes hundreds of avatars.

    The service includes 25+ new original series, 10+ original movies, 7,500 past episodes, 100 recent movies, and 400 library titles including the entire Disney Vault. You can stream original series like “The Mandalorian”, “Falcon and the Winter Soldier”, “Loki”, and “Obi-Wan Kenobi.”

    You can see the full list of available Disney, Disney Channel, Star Wars, Pixar, Marvel, Nat Geo shows and movies, or all available Disney Plus content by checking out our Disney+ Streaming Movie List.

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