Online video advertising revenues are forecast to grow from $190 billion in 2022 to $362 billion in 2027. By then, the prediction is that Netflix will generate just under a quarter of its revenue in the United States from advertising, although the proportion will be much lower globally. Analysts at the Omdia research division of informa estimate that nearly 60% of Netflix subscribers worldwide will be on its advertising supported tier.
Omdia forecasts that global revenues from online video advertising will overtake those from traditional television advertising in 2022 and surpass revenue from pay television subscriptions in 2023.
Revenue from online video advertising is forecast to account for over 40% of total video revenues in 2027, taking $362 billion compared to $118 billion from traditional television advertising.
Subscription revenue from online video services is meanwhile expected to grow less dramatically from almost $86 billion in 2022 to approaching $118 billion in 2027, compared to $229 billion from traditional pay television subscriptions.
Omdia expects that Netflix will generate less than 2% of its worldwide revenue from advertising in 2023, but forecasts that will rise to 14% in 2027. By then it expects that 58% of its subscribers will be on the advertising tier, through a combination of gaining new customers and existing customers opting to reduce their subscription fees.
Although advertising will not displace subscription as the main source of revenue for Netflix, Omdia says it will become a formidable player in the advertising market, fully competitive with services such as Hulu, Peacock and Paramount+.