On December 8, the streaming service Disney+ launched a new ad-supported tier. Previously, the streamer of all things Marvel, Star Wars and Disney paid $8 per month for ad-free viewing. Now they have raised the ad-free level to $11. Subscribers can pay $8, but they get ads, while brands get exposure alongside C3PO and Doctor Strange.
Why we care. In the early days of streaming, a lot of premium content was ad-free. A big shift happened earlier this year when top service Netflix announced it was introducing ads, then followed up this fall.
Many viewers may still choose the more expensive ad-free tier for these services. But as inflation and subscription prices rise, more people are interested in keeping costs down. As a result, this year has seen the number of US households with ad-supported subscriptions rise faster than those with ad-free ones.
Dig deeper: Consumers don’t mind ad-supported streaming and how it affects media planners
More choices for advertisers. Adding an ad-supported tier to Disney provides more pricing options for consumers. Netflix also offers an ad-supported tier priced at $7. Not only does this give advertisers access to more consumers, it gives advertisers premium inventory in the form of wildly popular movies and series.
“While Netflix has definitely gained more industry attention with its launch, that doesn’t mean marketers aren’t just as excited about Disney’s ad-supported tier,” said Matt Spiegel, EVP, media and entertainment vertical, TransUnion. “It’s hard to compare the two since Disney+ is more of an add-on strategy and the market expects more from Netflix after its long stance of remaining ad-free.”
A growing global audience. In the fourth quarter of 2021, audience research platform GWI found that 66% of US consumers watched some form of subscription streaming service in the past month. And 26% of US consumers were actively streaming Disney+.
However, global brands are not just looking to reach American audiences. And Disney+ is developing content that connects with audiences in other parts of the world, including Asia Pacific markets.
“Disney+ hopes to serve 50 new APAC originals by 2023, producing a lot of local language content,” said GWI’s head of consumer trends, Laura Connell. “Why? Because it’s an attractive region for streaming services looking to scale up their subscriber base.”
Don’t forget Hulu. Disney is the majority owner of the OTT service Hulu, which also offers ad-supported programming for $8 per month. The two services appear to be complementary and should not eat into each other’s audiences. In addition to popular series and movies, Hulu also offers local programming not found on Disney+.
“Disney+ and Hulu must introduce features that address ad relevance and brand fit to maintain the same expectations audiences, brands and advertisers expect,” said Fred Garthwaite, CEO and co-founder of video data company IRIS.TV. “Incorporating video-level content data into their advertising solution will help Disney increase the value of their new ad-supported options, while reducing the risk of poor viewing experiences and brand sentiment by eliminating ad placements in inappropriate environments.”
“When we look at the ad market from a macro perspective, this is business as usual for Disney that will get its own attention without competing against Hulu and its other media brands,” Spiegel said.
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