Disney+ to roll out ad-supported subscription model this year

Disney+ will be introducing an ad-supported subscription in addition to its option without ads, beginning in the US late this year, with plans to expand internationally in 2023. Kareem Daniel, chairman, Disney Media and Entertainment Distribution, said expanding access to Disney+ to a broader audience at a lower price point is a win for consumers, advertisers, and storytellers. The ad-supported offering is viewed as a building block in the company’s path to achieving its long-term target of 230 to 260 million Disney+ subscribers by FY24.

“More consumers will be able to access our content. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families," Daniel added.

Aside from Disney+, Disney also counts Hulu as another one of its ad-supported streaming services. OTT service ESPN+ also has pre-roll ads. According to Rita Ferro, president, advertising, Disney Media and Entertainment Distribution, advertisers have been "clamouring for the opportunity to be part of Disney+" since its launch. "Disney+ with advertising will offer marketers the most premium environment in streaming with our most beloved brands, Disney, Pixar, Star Wars, Marvel and National Geographic," she added.

Disney+ had 11.8 million new subscribers during Q1 2022, bringing the total number to nearly 130 million global paid Disney+ subscribers. Excluding Disney+ Hotstar, the company added 5.1 million paid subscribers in international paid subscribers, primarily driven by growth in Asia Pacific and Europe. CEO Bob Chapek said during a recent earnings call that its growth in Asia included the benefit of new market launches in Hong Kong, Taiwan, and South Korea in the quarter. Disney+ is also currently available in Singapore, Malaysia, Indonesia and Thailand. 

It also resumed growth in Disney+ Hotstar markets with 2.6 million paid subscriber additions in the quarter. Overall, Chapek said the company is pleased with Disney+ subscriber growth in the quarter and is looking forward to new market launches and a strong content slate later this year.

Meanwhile, direct-to-consumer revenues for Q1 2022 increased 34% to US$4.7 billion and operating loss increased 27% to US$0.6 billion. The increase in operating loss was due to higher losses at Disney+, and to a lesser extent, ESPN+, partially offset by improved results at Hulu. Lower results at Disney+ reflected higher programming and production, marketing and technology costs, partially offset by an increase in subscription revenue. Higher subscription revenue was due to subscriber growth and increases in retail pricing. The increases in costs and subscribers reflected growth in existing markets and to a lesser extent, expansion to new markets.

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Photo courtesy: Disney+

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