It’s official: The ad-supported version of Disney+ will cost $7.99 a month when it launches in the U.S. on December 8 — the same price of the streaming service currently. Disney+ without ads will cost more, $10.99 a month, Disney announced Wednesday.
When the new tier launches, it will mark the first time that Disney will introduce commercials on its flagship streaming service, which has amassed 152.1 million subscribers worldwide since it launched in November 2019, new numbers reported by Disney in Wednesday’s Q3 earnings report.
The service is one of three pillars of the conglomerate’s direct-to-consumer strategy: ESPN+ offers no ad-free tier. Hulu has had commercials since its 2010 launch and it remains a popular option; the service began offering an ad-free version in 2015. All together, the three services have 221.1 million subscribers.
Wednesday’s announcement also came with a restructuring of the Disney Bundle, which includes all three services. It currently costs $14.99 a month for Disney+, Hulu with ads, and ESPN+. Those subscribers will be grandfathered in at their current rate.
In December, Disney+ and Hulu with ads will cost $9.99 a month and $3 more to add ESPN+. A premium bundle with ad-free Hulu and Disney+, along with ESPN+, will cost $19.99.
“With our new ad-supported Disney+ offering and an expanded lineup of plans across our entire streaming portfolio, we will be providing greater consumer choice at a variety of price points to cater to the diverse needs of our viewers and appeal to an even broader audience,” said Kareem Daniel, chairman of Disney Media & Entertainment Distribution. “Disney+, Hulu, and ESPN+ feature unparalleled content and viewing experiences and offer the best value in streaming today, with over 100,000 movie titles, TV episodes, original shows, sports and live events collectively.”
Disney’s decision to bring ads to Disney+ is a major sign that the future of the streaming economy will depend heavily on advertisements, bringing back one of the ills of linear TV that early streaming services like Netflix sought to cure.
Netflix was the other commercials holdout until earlier this year, when executives began revealing details about plans to launch an ad-supported tier. That comes amid two consecutive quarters of subscriber losses, totaling nearly 1.2 million worldwide.
Netflix hopes the cheaper, ad supported tier it plans to begin rolling out in “early 2023” will help bring subscribers back and keep existing ones paying monthly fees. The company has offered few details, aside from its partnership with Microsoft to sell and service ads that will eventually “create a better-than-linear-TV advertisement model,” Netflix wrote in its Q2 earnings letter to shareholders last month.
HBO Max in June began offering an ad-supported option. At $10 a month, its $5 less than the ad-free version that first launched in 2020.
Paramount+ has two versions: The ad-free edition is $9.99 per month or $99.99 a year, the one with ads costs half that.
Paramount Global CEO Bob Bakish in March said Disney’s plans is a “validation of the strategy” of his company.
NBCUniversal’s Peacock has three tiers, including a free one. But more content is available on paid tiers that cost the same as Paramount+, though even the most expensive version has some content that contains ads.
Amazon Prime Video and Apple TV+ remain too major-streamer holdouts. But their parent companies have vastly different business models than media conglomerates.
Amazon, however, has been investing heavily in its free, ad-supported service, which was known as IMDb TV until April. That’s when the company rebranded it as Freevee and also revealed it planned to grow its slate of originals by 70 percent in 2022, with a spinoff of the Prime series “Bosch,” a new show from Bravolebrity Jeff Lewis, and “High School,” a series from Clea DuVall and Brad Pitt’s Plan B that’s based on the memoir by musicians Tegan and Sara Quin.
Apps like Freevee, known as free, ad-supported streaming (FAST) are emerging as key parts of many companies strategies. Paramount uses Pluto TV, with 68 monthly active users, to promote Paramount+ subscriptions and reach users who don’t want to pay for content. And Warner Bros. Discovery last week revealed that it’s exploring launching its own FAST service as a way to possibly better monetize its content library.