that Australia is amongst the first countries likely to experience ads on Netflix later this year.
By bringing a hybrid advertising/subscription tier, Netflix is adopting a business model already present on other streamers like Hulu. Netflix is keeping this a hybrid tier, meaning while the new tier will be cheaper, it will not be free, like ad-supported streaming available on Peacock. Netflix has announced that original movie programming may stay free of ads for a limited period upon release, and that both original and some licensed childrens’ content will remain free of ads.
Netflix will also have limits on the number of times a single ad can appear for a user and there is expectation that ads for movie content will be delivered in a pre-roll format, not interrupting the feature.Netflix is not the only subscription service to announce advertising as part of new pricing strategies. Earlier this year
TV consumers are historically well accustomed to advertising in television – in Australia, commercial free-to-air networks Seven, Nine, and Ten carry advertising, public broadcaster SBS carries a limited amount of advertising, and even pay-TV provider Foxtel is supported by both subscription fees and advertising. Advertising itself is not new to audiences, but it has not been present on a number of premium streaming platforms like Netflix before.
The ARPU is a metric used in the streaming industry that looks at how much money a company makes from each subscriber after deducting business costs. Having higher revenues from a subscriber can be driven by increasing subscription prices, driving subscribers to more expensive subscription tiers, reducing business costs, or by adding additional revenue streams like advertising.