Disney CEO Josh D'Amaro confirmed the company is exploring a free, ad-supported streaming product for consumers. The move follows a July report by Business Insider stating that Disney’s chief product and technology officer, Adam Smith, raised the possibility of a free tier during a company town hall.
D'Amaro said a free tier would help expand Disney's reach to a customer segment that is more price-sensitive. He stated that a free offering could help drive top of funnel Disney+ subscriber growth, though he noted there is nothing specific to announce regarding a free tier today.
The company aims to expand the Disney Plus ecosystem next year to establish it as Disney's digital centerpiece. This expansion includes a partnership with TikTok to bring Disney-centric, fan-created content to the Disney Plus short-form video feed.
Advertising revenue and market competition
Disney reported in its quarterly earnings that lower advertising rates weighed on revenue for its overall entertainment unit. However, D'Amaro said the company has more advertising inventory than many of its ad-supported competitors, which could help accelerate advertising revenue growth.
The market is healthy in sports but competitive in streaming, given the growing supply.
CFO Hugh Johnston said the company was pleased with commitments from recent Upfront negotiations, noting that volume commitments increased by double-digits compared to last year.
Reported cost for a 30-second Super Bowl ad spot this year.
Disney has sold out advertising spots for the upcoming Super Bowl, which will air on the ABC and ESPN networks in February. Free, ad-supported streaming services currently in the market include Fox Corp.'s Tubi, Paramount Skydance's Pluto TV, and Roku's The Roku Channel.
