Western Europe will be the biggest generator of advertising revenues for Netflix by 2027, according to research by Ampere Analysis.
The company predicts that Western Europe will generate $1.9 billion for Netflix, more than the US and almost as much as North America ($2.1 billion when Canada is included).
It forecasts that an additional $841 million will be earned from ad tier subscription fees in Western Europe ($1 billion in North America).
Ampere added that it thinks Netflix in Western Europe will experience an increase in average revenue per user (ARPU) as a result of the launch of the ad tier. Specifically, the firm predicts that 2023 ARPU will be 4.9 per cent higher than without it, rising to 8.6 per cent higher by 2027.
Western European viewers have the highest price sensitivity among Netflix’s customers which combined with relatively high advertising rates on a Cost per Thousand (CPM) basis makes advertising in the region a strong opportunity for the streaming giant, added the company.
Ampere predicts that 19.3 per cent of Netflix users in Western Europe will view content via the ad tier by 2027, most of them from the existing customer base.
Ampere estimates a subscriber growth (with ad tier) in Western Europe of 1.8 per cent above a subscription-only model.
Analyst Ben French said: “Very strong advertising rates for streaming in Western Europe will contribute to a significant uplift in the value per customer for those taking the ad tier. Although the overall boost to subscriptions is predicted to be modest in the region, this increased customer value will see Western Europe exceed the value of the US market by 2027.”