ARPU is an average so it includes every user, including users that never buy anything from an ad because they can't afford it. The average goes up a lot due to a minority of wealthy users. Those users will also be more likely to pay to remove ads. So Meta is afraid that the ad revenue will go down a lot and that's why they increase the monthly subscription by more than the current ARPU.
This is similar to collective insurance. If the rich people all self-insure and remove themselves from the pool, the viability of the collective insurance gets risked because you're only left off with the people that actually need help and nobody with a surplus to share.
For ads you get left off with a cohort of users that can't afford to pay to remove ads so can't also afford to pay for stuff advertised in said ads. Which means the ads will become more like TV ads for awareness rather than direct purchase, which will lower ad-based ARPU.
Wouldn't you also need to factor in that the people who will pay to avoid ads are likely already using ad blockers (or hate ads, in which case showing them an ad for your product is likely counter-productive)?
It's per Q so ~80/years. Difference between $80 (average ad revenue per year) vs $120 per year subscription is reasonable as subscriptions skew power users.
This is similar to collective insurance. If the rich people all self-insure and remove themselves from the pool, the viability of the collective insurance gets risked because you're only left off with the people that actually need help and nobody with a surplus to share.
For ads you get left off with a cohort of users that can't afford to pay to remove ads so can't also afford to pay for stuff advertised in said ads. Which means the ads will become more like TV ads for awareness rather than direct purchase, which will lower ad-based ARPU.