Disney may be planning to launch an ad-supported subscription scheme for its content streaming service, Disney+, to boost its slowing subscription growth in the U.S., according to The Information.
Launched in 2019, Disney+ has been showcasing content from Disney, Pixar, Marvel, National Geographic, and many others. Since its launch, the video-on-demand service has amassed more than 130 million subscribers to date. Considering that two years have already passed since its launch, the subscription growth has been slow for Disney as the company is expecting to have 230 to 260 million subscribers by 2024.
An ad-supported subscription scheme would be more affordable than the current Disney+ subscription of $7.99 per month or $79.99 annually. Other entertainment companies have offered a similar ad-supported subscription to their subscribers earlier.
To be attractive to potential subscribers, Disney must also consider the current pricing of other entertainment companies that have offered similar ad-supported schemes. For example, Discovery+ and Paramount+ are both offering an ad-supported subscription for $4.99 monthly. WarnerMedia and NBCUniversal also have their own ad-supported but affordable subscription programs.
All things considered, it will be crucial for Disney to decide on the best price point at which the ad-supported subscription scheme will be offered. Production and programming costs of Disney’s content will be crucial in determining the price point that will boost the revenue of Disney+. Disney plans to spend around $8 billion per year on its content until 2024. So it may be challenging to approximate revenue from its total subscription, including possible income from potential subscribers that the new subscription scheme will possibly lure.
However, if Disney successfully launched said ad-supported scheme, no matter what the subscription cost will finally be, it will leave Apple TV+ and Netflix as the only two entertainment streaming services with no ad-supported subscription scheme.
For Apple TV+, the lack of an ad-supported subscription scheme may not be a big issue since content streaming is not Apple’s bread and butter. Besides, Apple TV+ doesn’t have a huge catalog of content that can compete with Disney and Netflix yet. Netflix, for its part, could bank on the variety of content that it offers, including Korean dramas that are a big hit worldwide.
Disney announced that it would start offering Disney+ to an additional 42 countries and 11 territories in Europe, the Middle East, and Africa starting summer. The ad-supported subscription scheme would be attractive for potential subscribers from these new countries, should the company decide to offer it outside the U.S.