The number of UK streaming subscribers on packages that include commercials has overtaken those on higher-priced ad-free plans for the first time, in a milestone for British television.
The change marks a turning point for an industry that used to reject the idea of interrupting viewing with ad breaks as a relic of broadcast TV – a view championed in particular by Netflix.
“We’re now reaching an inflection point in the streaming world,” said Richard Broughton, the executive director at Ampere Analysis. “This is a significant about-turn from the earlier years of streaming, in which streamers eschewed advertising for a pure ad-free subscription model.”
When Netflix launched its streaming service almost two decades ago, one of its biggest pitches to viewers was that they could watch whatever they wanted, when they wanted, without being interrupted by ads.
As recently as 2019, Netflix’s then chief executive, Reed Hastings, said: “We want to be the safe respite where you can explore, you can get stimulated, have fun and enjoy – and have none of the controversy around exploiting users with advertising.”
However, three years ago the company dropped its resistance to the idea and led a streaming shift, seeking to reverse a post-Covid stall in growth with the launch of a cheaper ad-supported tier.
Now the total number of UK subscribers on such plans is forecast to reach just under 26.5 million by the end of this year – up almost 7 million on last year – as new streaming subscribers opt for the cheapest viewing option, or those on more expensive ad-free packages decide that a few ads are worth the trade off for lower bills.
In contrast, the number of UK streaming subscribers taking an ad-free package fell from 26.7 million to 23.1 million over the same period, according to Ampere Analysis.
In the case of Netflix, for example, the cost of paying for its cheapest ad-free package is more than twice the price of its ad-supported tier.
With the proliferation of streaming services, the cost for a “typical subscriber” – someone taking the standard monthly tier directly from the main players Amazon, Netflix, Disney+, Apple TV, Discovery+, Paramount+ and Sky’s Now TV – runs to £64 a month. This is up 14% from £56 a month in 2022.
“Ongoing macroeconomic pressures mean that UK consumers are seeking more cost-effective ways of getting their entertainment services,” Broughton said.
To date the impact of streamers introducing advertising has had a limited impact on traditional broadcasters such as ITV, Channel 4 and Channel 5.
Wary of the impact on their subscribers, who for more than a decade had become accustomed to streaming being an ad-free environment, the number of breaks appearing in films and TV shows has been low so far.
Many advertisers were also initially put off by the high pricing that players such as Netflix and Disney+ tried to command, backed by the argument that for the first time they would be able to target audiences watching hit shows such as Rivals, Adolescence and Stranger Things.
However, while Netflix has said it does not expect ads to be a “primary driver of revenue” until at least 2026, the increasing number of subscribers on ad-supported plans means the market for streaming adverts in the UK is growing rapidly.
The market – which includes ITVX, Channel 4 and Channel 5’s streaming services as well as players such as Pluto TV, Tubi and the smart TV operators such as Samsung – will reach £1.38bn this year. It has more than doubled in size over the past four years, and is almost half the £3.15bn ad spend on traditional UK linear TV.
Among the top 10 streaming advertisers are Apple, Tesco, McDonald’s and Subway, according to Ampere’s analysis of the UK market in November.
Top 10 advertisers on streaming services in the UK
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Apple
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Sky
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Tesco
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Sainsbury’s
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Indeed
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Subway
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Google
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Paramount
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McDonald’s
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BT
* Rank based on total ad viewing time in November – impression volume multiplied by ad length. Source: Ampere Analysis
