The Walt Disney Company on Thursday launched an ad-supported tier for its flagship streaming service Disney Plus, becoming the latest media company to embrace the integration of streaming video and advertising as it seeks to increase revenue for its direct-to-consumer products.
The ad-supported tier, called Basic with Ads, costs $8 a month or $80 a year — the same price that the ad-free version of Disney Plus used to cost — while the commercial-free version of Disney Plus (called Disney Plus Premium) has increased in price to $12 a month or $120 a year.
Both plans offer the same Disney Plus content, including movies and TV shows from Disney, Pixar, the Star Wars and Marvel franchises and National Geographic. Disney Plus Premium also allows streamers to download content to their phones or tablets for on-the-go viewing without an Internet connection.
According to the firm Kantar, about 25 percent of Disney Plus subscribers are expected to change their subscription to the cheaper plan with advertisements in order to stay at the $8 a month or $80 a year price point. As of November, Disney Plus had over 164 million global streaming subscribers.
Disney is the latest publicly-traded media company to embrace advertisements in order to lower the price point of its streaming products, which it hopes will lock in new and existing users while opening up additional revenue streams to help make their direct-to-consumer products profitable.
Last month, Netflix rolled out an ad-supported tier of its streaming video service at a price point of $7 a month. The price is well below Netflix’s basic plan, which offers high-definition, commercial-free streaming for $15.50 a month. Paramount Global’s Paramount Plus and Comcast’s Peacock also have ad-supported plans that are lower in price compared to their commercial-free tiers.
Pressure has grown on media companies to turn a profit after outsized spending on content and marketing for streaming services has outpaced revenue for several years.
In November, Disney reported a $4 billion loss attributed to its streaming product for the 12-month period that ended October 1, about twice as much money as it lost during the same time period in 2021. Its quarterly loss was $1.5 billion, according to the company’s financial earnings.