Waiting 10 seconds to skip… as your kid rewatches “Encanto” for the third time. Disney’s aiming for a cheaper subscription plan for its Disney+ streaming service (to debut later this year). The pricing is TBD, but it’ll be less than its standard $8/month (or $80 a year) option. There’s just one catch: commercials. Disney already has ad-supported versions for its Hulu and ESPN+ plans, but hasn’t added commercials to its namesake streamer. Here’s why it’s doing it now:
- Growth: Disney execs hope that a cheaper streaming option will help it reach 230M D+ subscribers by 2024. Since its launch, in 2019, Disney+ has added 130M subscribers (FYI: Netflix has 220M).
- Profits: Disney+ still isn’t profitable as a stand-alone segment, probably because it’s splurging so much on original content and keeping prices low to drive subs. The Mouse House is boosting spending by up to $1B on new programming this quarter alone.
If you can stream it, you can do it… Ad-supported services use a model that's helped make the TV biz profitable since forever. That’s why streaming rivals like Comcast’s Peacock and WarnerMedia’s HBO Max also offer cheaper commercials-based plans. Unlike streaming pure play Netflix, OG media conglomerates have to justify spending extra $$ on streaming costs as they balance more profitable parts of their biz (think: amusement parks and internet service).
Streaming is starting to look a lot like cable… bundles, ads, and all. The streaming market is saturated, and it’s a fight for every new sub. (Last year, the average number of subs per user fell for the first time.) Streamers are trying to sweeten their value props by offering cheaper ad-filled tiers and bundles (think: Disney+, Hulu, ESPN+) but risk resurrecting a long-hated biz model along the way.