What you need to know
- Disney+ expects most people to choose its new ad-based tier when it becomes available.
- The new tier is set to launch in the United States later this year.
- No pricing has been given for the new ad-filled tier.
Disney+ believes that most subscribers will choose to watch ads than pay higher prices to get rid of them. The company is set to launch the new ad-supported tier later this year although pricing hasn't yet been confirmed.
Speaking at the 9th Annual MoffettNathanson Media and Communications Summit yesterday, Variety reports that Disney CFO Christine McCarthy said that expectations are that Disney+ will follow the same subscriber makeup as Hulu. More people watch Hulu with ads than pay to remove them, McCarthy said, and it's thought that Disney+ customers will follow suit.
Notably, Disney+ isn't worried about the lost revenue that will come from charging customers less because it will be selling ads "at a premium," generating more than enough money to make up the shortfall. McCarthy also said "we really feel good about this opportunity" when discussing the ad revenue situation.
Disney+ currently costs $7.99 per month in the United States and while details on the ad-supported tier are sparse, the price will obviously be lower. How much lower remains to be seen, but Disney+ believes it will be lower enough that people will be willing to sit through ads to save money.
Those ads will be relatively few, though. Rita Ferro, president of Disney Advertising Sales, confirmed that ads will be limited to four minutes per hour initially, which is less than Hulu. Ads will also start with 15 and 30-second spots but that's likely to expand in the future.
Disney+ isn't the only one adding a cheaper ad-supported tier. Netflix will do the same by year's end, although no pricing has been confirmed there, either. There are no reports that Apple TV+ will follow suit, though its $4.99 per month price is low enough that ads won't make that much difference unless it was to offer a free tier.
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