This morning Disney confirmed reports that had been floating around for the last couple of days, that Disney+ will launch a new tier of its popular streaming service later this year, one that will be ad supported. It’s a somewhat surprising decision if I’m being honest, as Disney+ is already one of the cheaper streaming services on the market, with one of the most popular catalogues of content in the history of media.
While details, like what this new ad-supported option will cost, or when it will launch, beyond "later this year," are currently unknown, one assumes it will come in at a cheaper price point than Disney+ is currently, as anybody who was willing to pay the current price is likely already doing so. But because Disney+ is already so cheap, is this new tier really going to add that much value to consumers, and that many more subscribers for Disney?
When Disney+ debuted it came in at an impressive $6.99 per month. While Disney has one of the most globally beloved back catalogues of content, it was understood that original content is a big part of what sells streaming services, and Disney+ wouldn’t have much of that out of the gates. Eventually Disney+ built that up and we’ve since seen one small price increase, making the service now cost $7.99 per month.
Right now there are two other major streaming services that offer options with or without ads. Hulu costs $6.99 with ads or $12.99 without them. HBO Max is $9.99 with ads or $14.99 without them. These are quite significant differences. You’re paying 50% more, or more, to get the service without ads. Hulu with ads right now is only a dollar more per month than Disney+ without them. HBO Max is more expensive, even with ads.
Disney CEO Bob Chapek recently indicated we could see another Disney+ price increase in early 2023, but with this announcement it seems likely that could happen sooner. We could see a price increase on the current version of Disney+ to help make the ad-supported version seem like a better deal. If it’s only a dollar or two per month cheaper, will that be enough of a reason to bother? There's only so much cheaper that you can get from the current price/
But at the same time, if we see a significant enough price increase, we could see current subscribers drop down to the ad supported version as a way to save money. This would reduce what Disney brings in via subscriptions. Certainly the ad sales would help balance that out, but it’s not going to do anything for subscriber numbers overall.
And will people really want ads. With something like Hulu, where a lot of the content comes from broadcast TV, ads are already standard, they don't feel out of place. A lot of the content on Disney+, nearly 100 years of movies, was never made with spots for ads to be placed, which will be a less than optimum experience.
On the plus side, for those that haven’t subscribed to Disney+ because of the cost, this will almost certainly be one of the cheapest streaming options out there. And Disney has almost certainly done the research to be sure the market is there. It’s clear Disney wants to be the number one streaming site in the world, and with this new option, they might just get there.
