Back at the Investor Day in 2019, Disney told shareholders that it was planning on making its streaming businesses, including Disney+ and Hulu, profitable by the end of 2024.  While Disney was spending billions creating new original content to chase subscribers in the early days, everything changed when Wall Street investors wanted to see if the streaming business was profitable.

This resulted in Disney becoming much more focused on ensuring its streaming services were making a profit. whereas years ago, they were losing billions of dollars per month, in the latest quarter, they nearly reached profitability.

The increase in subscript costs, a reduction in the amount of original programming, and the introduction of an ad-supported tier have all helped.

In order to make sure Disney+ and Hulu reach their target of profitability by the end of 2024, the advertising division at Disney has been heavily discounting its rates in order to secure more business.

According to Variety, in an effort to win more bids, Disney has been making deals that have significant “rollbacks” in the rates it charges to reach 1,000 viewers (CPM) on Disney+.  They have been reducing their CPMs by as much as 10% to 15%.

By lowering the deals, they’ve been able to secure deals that will increase the level of volume for their ad-supported business.

This deal is apparently angering some rival streaming services, who had hoped not to roll back their numbers and are being forced to match Disney in order to secure business.  One executive told Variety:

“There are media partners who are going to be aggressive and try to win share”

 

With the advertising business generally down, which is impacting the advertising rates for streaming platforms, linear television channels, websites, and social media platforms, Disney’s move is ensuring that they get those ads in place, even if it means taking a little less. And with so much competition from other streaming services that have also introduced ad-supported tiers, there are many opportunities for advertisers.

This isn’t the first time Disney has done this, but there is likely much more pressure on ensuring Disney+ is getting as much revenue from advertising as possible, though there is a risk that Disney could cause longer-term damage with advertising expecting a lower rate moving forward, but with the likelihood of Hulu and Disney+ merging following the completion of its deal with Comcast and with more people turning away from linear television, there will be more people using the ad-supported tier in the future.

Roger’s Take:   Unfortunately, the advertising business is very tough right now, and with the advertising tier on Disney+ still being in its early days and Hulu On Disney+ is still very new, they are just making sure they have that money coming in, even if its a bit less, because it’s better in their pocket than at Amazon, Netflix, or Peacock.    But this could cause some problems later down the line with future expectations, but sometimes you’ve got to just worry about that at a later date.

What do you think of Disney’s decision to cut its advertising rates?  Let me know on social media!

 

 

For the latest Disney+ news, follow us on TwitterFacebook, and Instagram.



Roger Palmer

Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom. Email: Roger@WhatsOnDisneyPlus.com Twitter: Twitter.com/RogPalmerUK Facebook: Facebook.com/rogpalmeruk

Related Article