Netflix Expected To Earn $1b Ad Revenue From APAC By 2027: Ampere

Netflix's ad revenue from the Asia Pacific is expected to approach $1 billion by 2027 due to the high tolerance of advertising in the region, according to a new report by Ampere Analysis. In addition, the report stated that $574 million will be generated by ad tier subscription fees.

As per the report, Asia Pacific will be the strongest growth region for Netflix’s ad tier, with one of the largest increases in revenue and the greatest average revenue per user (ARPU) uplift.

Among the three biggest regions globally, Asia Pacific will earn a greater percentage of its ad tier revenue from subscriptions (38% vs. 34% in North America and 30% in Western Europe) due to relatively low advertising rates. A rapid rise in subscribers in the region will see overall ad-tier revenue grow quickly.

Ampere explains that APAC viewers are the most positive about advertising with four in 10 (41%) saying they do not mind ads. The comparative figures are 35% in North America and 24% in Western Europe. Ampere predicts that 22% of users in the region will take the ad tier option. Coupled with subscriber growth of 17.6% by 2027, Asia Pacific will be one of the fastest-growing markets for advertising income.

Globally, Netflix will earn $5.5 billion in annual advertising income by 2027, boosted to $8.5 billion a year by ad tier subscription fees. The launch of an ad tier will see Netflix earn $2.2 billion more by 2027 versus a purely subscription-only model, driven by an ARPU uplift combined with a modest increase in the overall subscriber base. Ampere estimates that total customers will be 3.2% higher than they would have been had Netflix not launched an ad tier.

Analyst at Ampere Analysis Ben French says: “Although not as valuable as the US market, Asia will be a particularly strong region for Netflix’s ad model. The high tolerance of advertising will see the strongest uptake of the ad tier and although rates charged for advertising are lower than other regions, strong subscriber growth will ensure Asia remains central to the success of Netflix’s new strategy.”