No plans to offer ad-supported Disney Plus, CEO says

The Walt Disney Company is not considering plans to offer an advertisement-supported version of its flagship streaming service Disney Plus, the company’s chief executive remarked this week.

On Tuesday, Disney Chief Executive Robert Chapek said his company was not considering a plan to offer a discounted version of Disney Plus that is supported by ads.

“We’re always reevaluating how we go to market across the world, but we’ve got no such plans now to do that,” Chapek said. “We’re happy with the models that we’ve got right now.”

The affirmation stands in contrast to an increasing trend by competing media companies who have shown a deep interest in offering free or reduced-priced access to their streaming services in exchange for a viewer’s willingness to sit through a handful of advertisements.

Some services, like ViacomCBS streamer Pluto TV and Fox Corporation’s Tubi, are entirely free to access and are funded completely through advertisement breaks, while others like Paramount Plus and Comcast’s Peacock give users the choice between a cheap, ad-supported tier of service or paying more to eliminate commercial interruptions.

Ad-supported services offer incentives to both media companies and viewers: Streamers get cheaper access to content, while media companies tap into a growing revenue stream. Last month, a marketing firm forecast Pluto TV’s advertisement revenue to exceed $1 billion by next year; that  prediction came several months after executives at Fox Corporation said they believed Tubi’s ad revenue would surpass that of its traditional broadcast network in the near future.

One big reason why Disney may not be considering plans for an ad-supported version of its streaming service is because it already has an ad-driven streaming solution in the domestic marketplace: Hulu. The same marketing firm that predicted Pluto TV’s ad revenue would surpass $1 billion by next year earlier said Disney would generate nearly three times that much through Hulu by the end of this year.

Another factor likely weighing in Disney’s decision is how the federal government regulates advertisements targeted at children. Existing federal regulation requires streaming video services and other online companies to receive explicit parental permission before collecting personal information from children; the type of information collected from video ads that track consumer interest and behavior would likely fall under this category.

Those types of ads are employed by Hulu, where the content library of movies and TV shows tends to gear toward an older, more mature audience. For that reason, Disney may decide the headache of offering advertisements through Disney Plus isn’t worth it just to grab a few more customers — the service already has more than 100 million global subscribers who pay out around $8 a month or $80 a year for access.

But the company isn’t ruling out plans for an ad-supported version of the streaming service entirely, according to Chapek. It’s just not on the table right now or for the foreseeable future.

“We won’t limit ourselves and say no to anything, but right now, we have no such plans for that,” he said.

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