BURBANK, Calif.—Disney has provided new details on the previously announced launch of a Disney+ tier that includes advertising.
During Disney’s earnings call for the second quarter of their fiscal year ending April 2, 2022, CEO Bob Chapek confirmed that they will “introduce an ad-supported subscription offering in the U.S. by the end of the calendar year and internationally in 2023,” for Disney+.
“Expanding Disney+ access through multiple price points is a win for consumers and advertisers,” he said during the earnings call with investors.
The company, however, declined to discuss pricing.
In its Q2 earnings report, Disney reported hitting 205 million direct-to-consumer subs.
Disney+ ended the quarter with 44.4 million subs in the U.S. and Canada, up 19% from 37.3 million in 2021 and 137.7 million subs worldwide, up 33% from a year earlier.
“We're expecting a very positive reaction from advertisers overall,” he added later in the call. “They have been asking for this for years. And we also expect Hulu, as you know, which has been very strong for us at the same time, to be a key contributor of our performance at the upfront this year.”
“The other thing is that sports are going to continue to be in high demand,” he continued. “And so with the advertisers, we focused on the right deals that we've made over the past few years as well as our robust slate of original content shows and our studio shows and original content games.”
This move could also help them grow the pie of potential streaming revenues, he argued.
“We believe that the value proposition of advertising with Disney+ is only enhanced with our addition of an ad-supported tier on Disney+,” he said. “So we believe it's good for the consumer because it's going to give us another entry price point, but it's also going to be great for the advertisers. Our advertisers increasingly are looking for multiple platforms to reach a broader reach. And we think that as a company, we're going to provide that given our portfolio of streaming and our linear networks. So I think we're creating more avenues, both for consumer choice and for comprehensive advertising solutions, for our advertising customers at the same time.”
Chapek also noted that they were well on their way in terms of creating the technical infrastructure for launching an ad supported tier.
“We're in really good shape in terms of being able to meet our timing with our Disney+ ad tier,” Chapek said. “And that's largely because we're already doing it. The combination of our ESPN+, streaming tech stack and our experience in Hulu and the software, we think that our current advertising capabilities really substantially prepare us to already bring this tier into operations. So there's nothing that we need to go acquire or, frankly, even in any significant way developing anything new. And that's due to the ongoing investments in technology that we've made over time to increasingly automate much of this process. And we've been looking forward to this for a while. So this is something that's well-greased, if you will. And our teams are hard at work at making that become a reality.”
