Disney said Friday consumer streaming service Disney+ will introduce an ad-supported subscription in addition to its option without ads in the U.S. starting in late 2022, with plans to expand internationally in 2023.
It said it will announce more details, including launch date and pricing, at a later date.
The ad-supported offering is viewed as a building block in the company’s path to achieving its long-term target of 230-260 million Disney+ subscribers by FY24, the company said. The service was at 130 million by the end of 2021, but growth has been slowing. A dollar-a-month price hike (to $7.99) kicked in for Disney+ about a year ago and likely has had been a short-term impediment to growth, as is often the case when price increases hit.
“Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone – consumers, advertisers, and our storytellers,” said Kareem Daniel, Chairman, Disney Media and Entertainment Distribution. “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.”
“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.”
Disney+ is available as a standalone streaming service or as part of The Disney Bundle that gives subscribers access to Disney+, Hulu, and ESPN+.
The ad-supported tier will make standalone Disney+ more competitive with the lower tiers of Hulu and Paramount+. Peacock’s premium tier is in the same price range as Disney’s new service. The addition of an ad-supported level follows the pattern of HBO Max, which operated a single, ad-free option before adding a cheaper one with ads. At $10 a month, HBO Max with Ads is in a higher bracket than Disney+ but has proven to be an effective driver of new subscriptions, according to WarnerMedia.
Down the line, the addition of advertising to Disney+ could be a harbinger of a long-predicted combination of Hulu and Disney+, though Disney execs have always pushed back on that assumption. Comcast remains a financial stakeholder in Hulu until 2024, so any dramatic shifts in its direction will likely need to wait until that time.
Dade Hayes contributed to this report
