Survey: 23% of Disney+ Subscribers Say They’ll Switch to New Ad-Supported Tier
Disney+ is due to launch its new, ad-supported tier this Thursday, Dec. 8. Disney believes the new price plan will be able to attract a good number of price-conscious customers, despite the fact that it already has over 164 million global subscribers.
But according to research done by Kantar, as reported by Deadline, the new Disney+ plan with ads may not attract as many new customers initially as Disney might hope. Kantar’s research shows that 23% of existing users plan to switch to the new tier when it launches. That means as many as 37 million current Disney+ users may make the change to the new plan as early as Thursday.
Those numbers echo a survey done by Kagan Consumer Insights in August, which also found a high percentage of initial sign-ups to the new plan would come from existing customers. The good news for Disney+, however, is that despite existing customers opting for the lower-priced tier, this will likely not lead to a decrease in revenue.
The new ad-supported plan will be introduced at $7.99 per month, the same price point users are currently paying for the ad-free plan, meaning that while customers might be “downgrading” their service, they will still be paying the same amount. Additionally, Disney will increase the average revenue per user (ARPU) with the introduction of coimmercials. The ad-free plan will increase from the current $7.99 to $10.99 per month on Dec. 8, but users can still opt for the Disney Bundle and save money.
The other good news for Disney is that at least customers who transition to the new plan will still be subscribers. The other option is that they might simply leave the service for good. Disney+ saw a churn rate of 6% in its most recent quarter, which isn’t terrible, but keeping customers in the fold is crucial for newly returned CEO Bob Iger’s mission of turning around $1.5 billion in streaming losses last quarter.
The ad-supported tier will certainly help Disney raise the amount of money it pulls in per customer, which is the data point that most industry analysts are now pointing to as a measure of a streaming platform’s success. Gone are the days when streaming services could announce a few million new subscribers and be instantly rewarded by investors with increased infusions of cash.
Indeed, Disney+ is far from the only service to utilize an ad-supported tier to bring in fresh revenue. Netflix launched its own ad-supported tier on Nov. 8, and analysts project the two companies could each see an extra $1 billon or more by 2025 from the new plans. The rollout of Disney+’s new plan will leave Prime Video and Apple TV+ as the only major subscription video-on-demand services without an ad-supported plan, and if the plan with ads brings as much money in for Disney as is projected, those services may get rolling on their own new price tiers soon.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”