Friday, July 30, 2021

Disney not considering cheaper, ad-supported Disney+ tier

While other streaming services experiment with ad-supported tiers to grow subscriber numbers, Disney is content with keeping its premium Disney+ service a completely for-pay experience.

Speaking at the Credit Suisse 23rd Annual Communications Conference, Disney CEO Bob Chapek said the company has no plans to add an ad-supported tier to Disney+ in the near future, reports The Verge.

“We’re always reevaluating how we go to market across the world, but we’ve got no such plans now to do that. We’re happy with the models that we’ve got right now,” Chapek said. “We won’t limit ourselves and say no to anything. But right now, we have no such plans for that.”

Chapek elucidated on Disney’s streaming price strategy while answering a line of questioning from Credit Suisse managing director Doug Mitchelson. Of note, Mitchelson said many Disney customers are inured to commercials and ad breaks, coming from the company’s cable offerings. While true, the benefit gained by including ads to offset a portion of monthly Disney+ streaming costs would apparently be immaterial at this stage.

The line of thinking was borne out by customer response to Disney’s recent price hike from $7 a month to $8. According to Chapek, the change did little to impact subscriber numbers.

“We did launch at a very attractive price-value opening point,” Chapek said. “The first price increase that you mentioned in the first 16 months happened recently, and we’ve seen no significantly higher churn because of that.”

Disney’s announcement arrives as segment competitors introduce ad-supported models to reel in customers. For example, HBO Max in May turned to ads to cut its monthly rate by $5.

Apple does not provide an ad-supported tier of Apple TV+, though the company has been offering one-year trials to new device buyers. That period was reduced to three months this week.


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