Forecasts from Ampere Analysis predict that Netflix is set to become the third-largest ad-supported streaming service in Australia by 2027.

Ampere expects that the global streamer will generate north of A$150 million (€90.2m) in advertising revenue in Australia in 2027. Broadcaster-run streaming services 7Plus and 9Now will be the only professional streaming services to earn more through advertising that year.

The growing reach of the ad-supported tier, and strong watch-time, will support Netflix’s positioning

Netflix introduced its hybrid ad tier in Australia in November 2022, allowing users to opt into the plan for a reduced fee. The streamer has been successful in converting its subscribers over to the new standard with ads plan and on current trajectories, Ampere estimates that over 2 million subscribers will be on Netflix’s hybrid tier by 2027.

The main factor that will influence Netflix’s ability to reach the #3 position will be its success in driving demand for inventory. Ad price points are currently set at a premium to the market average, and Netflix is currently managing this through scarcity – with low in-stream ad loads. Driving these ad-loads to target levels of between 4-5 minutes of ads per streamed hour will be key to realising ad market growth.

Prime Video scaled its hybrid offer quickly, rolling over its entire subscriber base onto the ad tier at launch. This move complemented the Amazon’s historic activity in the advertising space: the retailer launched its advertising platform, Amazon Ads, in Australia in 2017. However, with a high proportion of its subscribers already on its ads plan, its potential for further growth is predicated instead on how well Amazon can drive per-user video consumption levels.

Ed Ludlow, Senior Analyst at Ampere Analysis, commented: “Our expectations for Netflix’s growth reflects the streamer’s ability to generate ad impressions through its large subscriber base and popular content catalogue, which keeps audiences engaged for long periods. If it is to surpass its BVoD rivals in Australia for ad revenue, the streamer needs to continue to coax users onto the ad-supported tier, maintain the premium positioning of its inventory, and focus on scaling to 4-5 minutes of filled ad slots per hour.”

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Tags: advertising, Ampere Analysis, australia, netflix