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Disney+ will introduce cheaper ad-supported version

Disney+ will introduce cheaper ad-supported version
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Disney+ will introduce cheaper ad-supported version

 

Disney+ will soon be available for a reduced price, but you’ll have to sit through the commercials.

The Walt Disney Co. said Friday it will introduce an ad-supported version of its Disney+ streaming service in the United States later this year, with plans to roll out overseas in 2023. The move reflects the pressure on the hot streaming advertising market. At Disney to grow its streaming business and to have a widespread tendency among media companies to attempt to rebuild the traditional television ecosystem online.

But the lower-priced Disney+ carries risks, including potentially declining speeds in some of Disney’s cable networks.

Disney hasn’t set a price for the subscription yet. The no-ads version, which was introduced in 2019, costs $8 per month. Although the streaming marketplace is changing rapidly, competing services charge 30 percent to 40 percent less for their ad-supported options. (For example, Paramount+ charges $5 per month for “limited business interruptions” and $9 per month with no ads. HBO Max with commercials runs $10 a month, and HBO Max without $ 15 per month.)

The Information, a technology and media news site, reported Thursday that Disney was discussing an ad-supported option.

Rita Ferro, president of advertising sales at Disney Media & Entertainment Distribution, said in a statement, “Since its launch, advertisers have been battling for the opportunity to be a part of Disney+, and not simply because of the growing number of more streaming inventory. is seeking.” Disney’s announcement comes as the company prepares for the television industry’s traditional “upfront” ad-sales season.

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In offering an ad-supported version of Disney+, Disney joins rivals such as WarnerMedia, Paramount Global and NBCUniversal, which all offer subscription pricing based on how many ads are fed to viewers. (The major exceptions are Apple TV+ and Netflix, which have repeatedly stated that it has no plans to go into advertising.) Disney advertises its own Hulu.

But advertising is a unique risk for Disney+ because of the company’s dominance in children’s television. For decades, the company’s flagship cable network, Disney Channel, marketed it to parents as a safe place. It also features no commercials in programming aimed at older children (unlike Nickelodeon).

Certain areas of Disney+ are likely to remain ad-free, regardless of subscription plan; For example, the service has a lot of content for pre-school-age kids. But the line can be blurry. Ms. Ferro cited Pixar as a brand that advertisers would be able to access.

Some analysts questioned the timing of Disney’s announcement. “Is the sub development slow?” Richard Greenfield, founder of the Lightshade Partners research firm, wrote on Twitter, referring to the subscribers. “There’s a lot of material coming in, why lower the price now.” Mr. Greenfield and others also wondered whether the move could be a harbinger of the combination of Disney+ and Hulu. Disney shares fell nearly 4 per cent to $140 in early trading Friday.

Disney Media and Entertainment Distribution Chairman Karim Daniels ranked the low-priced, ad-supported Disney+ option as “a win-win for everyone – consumers, advertisers and our storytellers.” Disney said the offering was “a building block” in the company’s promise to Wall Street that Disney+ will have 230 million to 260 million paid subscribers by 2024. Disney+ added 11.8 million subscribers worldwide to reach 129.8 million in its most recent quarter.

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Disney’s streaming division lost about $600 million in that quarter — about 27 percent more than a year ago — due to costs that included content production, marketing and technology infrastructure. The company said last month that streaming programming spending (for Disney+, Hulu and ESPN+) would increase by $800 million to $1 billion in the current quarter.

Disney has told investors that the division will be profitable by 2024. To accomplish this, the company has been aggressive in shaping its streaming portfolio in the image of its old-fashioned cable television business. This includes generating revenue from both customer fees and advertising sales, and selling your services as a bundle. Last year, Disney began how to remove bank account from phonepe requiring some Hulu customers to have Disney+ and ESPN+ as well. This type of bundling is what made cable so profitable for media companies for decades.

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