Disney today disclosed its intentions to launch a Disney+ ad-supported tier later this year.
The ad-supported service—which will be sold alongside the current ad-free Disney+ experience—will launch first in the U.S. in 2022 before expanding to international markets in 2023.
Disney is positioning the ad-supported offering as a “building block” toward achieving the company’s forecast of 230 million to 260 million Disney+ subscribers by 2024. Disney+ added 11.8 million subscribers during the company’s fiscal first quarter, up from 2.1 million in the previous quarter, and brought its total up to 129.8 million. However, in previous quarters the service has seen its subscriber growth slow down particularly in the U.S. and Canada.
Disney is promising more details including launch date and pricing will be announced at a later date. But it’s reasonable to think that the ad-supported tier will cost less than ad-free Disney+, which currently retails for $7.99 per month or $79.99 per year.
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“Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone - consumers, advertisers, and our storytellers,” said Kareem Daniel, chairman of Disney Media and Entertainment Distribution, in a statement. “More consumers will be able to access our amazing 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.”
Disney already operates Hulu, one of the biggest ad-supported streaming services in the U.S., and ESPN+. The company said will soon extend that contextually relevant advertising experiences to Disney+.
“Since its launch, advertisers have been clamoring for the opportunity to be part of Disney+ and not just because there’s a growing demand for more streaming inventory,” said Rita Ferro, president of advertising at Disney Media and Entertainment Distribution, in a statement. “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. I can’t wait to share more with advertisers at the Upfront.”
Building an ad-supported tier into Disney+ will bring the service closer in competition with peers including HBO Max, Discovery+ and Paramount+, all of which offer lower-cost ad-supported tiers that tend to boost average revenue per user through advertising dollars.