It’s official — Disney+ will be introducing an ad-supported subscription beginning in the U.S. in late 2022 with plans to expand internationally in 2023. The launch date, pricing, and other details will be announced at a later date.
Yesterday, The Information reported that Disney was considering launching a less expensive tier with ads in order to attract consumers that were more willing to purchase a service at a lower price point. This has been confirmed to in fact be the case according to an official Disney press release.
“Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone - consumers, advertisers, and our storytellers,” Kareem Daniel, Chairman, Disney Media and Entertainment Distribution stated. “More consumers will be able to access our amazing content. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families.”
The kid-friendly platform will be joining Disney-owned Hulu, which already has an ad-supported video-on-demand subscription, turning commercials into a $1 billion revenue stream.
“Since its launch, advertisers have been clamoring for the opportunity to be part of Disney+ and not just because there’s a growing demand for more streaming inventory” said Rita Ferro, President, Advertising, Disney Media and Entertainment Distribution. “Disney+ with advertising will offer marketers the most premium environment in streaming with our most beloved brands, Disney, Pixar, Star Wars, Marvel and National Geographic. I can’t wait to share more with advertisers at the Upfront.”
The company is hopeful that the new ad-supported offering will help its long-term target of 230-260 million Disney+ subscribers by FY24. During Q1 2022, Disney reported that Disney+ had amassed 129.8 million subscribers in just over two years of operation.
Antenna’s “Year in Streaming Report” shows that viewers increasingly chose less expensive, ad-supported subscriptions in 2021 than in previous years. It’s likely that 2022 and beyond will be no different.
According to the report, ad-supported plans accounted for 32% of all Premium SVOD sign-ups in 2021, versus just 19% in 2020. The majority of Hulu, Paramount+, and Peacock subscribers are signed up for the ad-supported tiers of each service. Meanwhile, discovery+ has a lower proportion of subscribers on its ad-supported tier, likely due to the fact that the service only charges subscribers an extra $2 per month to go ad-free, as opposed to $5 or more on most platforms.
While we don’t yet know the planned price for Disney+’s new ad-supported plan, the streamer’s ad-free plan is currently priced at $7.99/month. Disney+’s streaming sister Hulu currently charges $6.99 for the ad-supported option, which is $6 less than its $12.99 ad-free tier.
Another factor that Disney did not address in their press release announcing the plan was how this would impact the increasingly popular Disney Bundle. The plan allows subscribers to receive discounts when they sign up for all three of the Disney-owned services: Disney+, Hulu, and ESPN+. While Hulu already has multiple price points, and Disney+ soon will, ESPN+ is currently slotted in at $6.99.
When Disney+ launches its ad-supported tier, it will be interesting to see how this impacts the bundling options for consumers. Will they be forced to choose between ad-free and ad-supported options for both Hulu and Disney+, or will they be able to mix and match depending on preference? Only time will tell.
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.”