The ad-supported plan on Disney Plus is a little less than one year old, but it has already become just as popular as the ad-free version. From March to September 2023, Disney says that 50 percent of new subscribers chose the $7.99 per month plan over the pricier commercial-free one.
That’s a sign that Disney’s ad-supported plan is on the rise, as Rita Ferro, Disney’s president of global advertising, tells The Hollywood Reporter that 40 percent of subscribers chose the ad-supported tier earlier this year. Disney first launched its ad-supported tier last December, and it’s starting to push more subscribers toward this cheaper option.
While Disney Plus joined several other streaming services in raising the price of its ad-free subscription from $10.99 to $13.99, it left its ad-supported plan the same price. That was “done for a reason,” Disney CEO Bob Iger said during the company’s last earnings call in August. “We’re actually keeping the advertiser-supported product flat in terms of prices,” Iger said. “We’re obviously trying with our pricing strategy to migrate more subs to the advertiser-supported tier.”
While it might seem illogical to drive subscribers to the cheaper tier, Disney makes additional revenue from the ads users see on the service. Kevin Lansberry, Disney’s interim chief financial officer, said during the August earnings call that the new tier is “continuing to improve” its average revenue per user (ARPU), something that Netflix has observed with its ads tier as well.
As Disney Plus continues its ad-supported push, the company is also rolling out the cheaper option to Canada and several European countries on November 1st, including the UK, France, Germany, Italy, and others. We’ll likely hear more about how the ad-supported tier is doing in the company’s fourth quarter earnings report next month as well as its plans to tackle password sharing.