With the launch of cheaper, ad-supported subscriptions, Netflix and Disney+ are expected to bite into the revenue of traditional television channels as the streaming services look toward continued expansion.
After having long-shunned the notion of advertising on its platform, Netflix thisyear accelerated work on just such an offering as inflation prompts consumers to spend less and competition in the streaming television market intensifies.
Netflix is expected to launch an ad-supported subscription tier in early November, about a month before rival Disney+ does the same, according to US media reports.
"These launches are going to create the biggest premium advertising space in more than a generation," said analytics company Samba TV senior vice president Dallas Lawrence.
"It's going to be a major moment for advertisers."
The windfall for Netflix and Disney+ could be considerable. Market tracker Statista forecasts that spending on television ads globally will hit $159 billion this year.
Insider Intelligence analyst Ross Benes estimates that advertising revenues from streaming could reach $30 billion in two years in the United States alone.
Global video sharing and online television platform YouTube saw $28.8 billion in ad revenue in 2021.
"Not long ago, everyone said subscriptions would kill ads," said Kevin Krim, head of marketing analytics firm EDO.
A lower-priced Netflix subscription subsidized by ads promised to let marketers reach viewers where ever and when ever they stream shows, while more personally targeting messages.
A Disney+ subscription with advertising would tempt marketers with the potential for ads to be served up with blockbuster content such as its "Star Wars" franchise.
Netflix has the potential to woo advertisers with hit original shows such as 'Stranger Things' in an ad-subsidized subscription tier the streaming television giant could customize in creative new ways.