Walt Disney Co. will launch a lower-cost version of Disney+ with advertising later this year as a way to accelerate the growth of its flagship streaming service.
According to Disney, the new service would debut in the United States in late 2022 and expand the following year internationally. Price and timing will be announced at a later date.
The move follows in the footsteps of other media companies that provide a variety of plan alternatives for their online video services. For example, Comcast Corp’s Peacock and AT&T Inc.’s HBO Max are available in ad-supported and ad-free versions. In addition, commercials have generated a US$1 billion revenue stream for Disney’s own Hulu streaming service. Netflix Inc. is the one exception among the major streaming companies, offering three pricing categories but none of which involve advertising.
In a statement, Kareem Daniel, chairman of Disney Media and Entertainment Distribution, said, “Expanding access to Disney+ to a bigger audience at a cheaper price point is a win for everyone — consumers, marketers, and our storytellers.”
Disney+, which includes classic animated films as well as original programs like “The Mandalorian,” a Star Wars spinoff, debuted in 2019 for US$7 per month. It now costs around US$8 per month or US$80 per year, following a price rise last year. For around US$14 a month, the business also provides a bundle that includes ESPN+ and the ad-supported version of Hulu.
In the fiscal first quarter, the company reported 129.8 million Disney+ subscribers. By 2024, Disney Chief Executive Officer Bob Chapek has set a lofty aim of 230 million subscribers worldwide. The ad-supported version of Disney+ is considered as a “building block” for that aim, Disney said on Friday.
Disney shares were down 2.8 per cent amid broader market drops at 9:47 a.m in New York.