Ad Tier

Explanation

An ad tier is a subscription plan that lets viewers access a streaming service at a lower monthly price in exchange for watching advertisements during and between content. Netflix launched its ad-supported tier at $6.99/month in November 2022; Disney+ followed with its own ad tier. Ad tiers blend the SVOD and AVOD models — subscribers pay some fee (reducing churn compared to fully free services) while the platform generates additional ad revenue per user. Ad loads are typically 4–5 minutes per hour, lower than traditional TV. Streaming ad tiers allow advertisers to target specific demographics with precision not available on linear TV, which is why CPMs (cost per thousand impressions) for streaming ads are considerably higher than broadcast. Services that launched ad tiers saw subscriber growth as price-sensitive viewers who had been avoiding the service chose the cheaper option.