One of the major advantages to Disney+ is that it doesn’t have any commercials interrupting films or series, putting it in line with other streaming services like Amazon Prime and Netflix, which don’t include commercials. However, there are many other streaming services that do, such as HBO Max, Paramount+, Peacock and Hulu, which offer ad-free versions at a higher cost.
Disney has had some great financial success recently, with Hulu finally going into profit following a more focused approach to selling advertising once Disney restructured Hulu and its network channels such as ABC and FX into one department.
During a recent virtual Q&A with Disney’s CEO Bob Chapek at the Goldman Sachs 30th Annual Communacopia Conference, Bob was asked about Hulu’s advertising plans, and he mentioned introducing advertising into Disney+.
I think what’s driving it is that combination of great content that draws a lot of eyeballs and draws a lot of interest and a lot of viewership. But at the same time, really sophisticated modeling and technology that we have that enables our advertisers to target exactly who they want, when they want and how they want. Now, in terms of this extendibility to our other platforms, I think it’s important to realize the different target audiences of the platforms.
And for example, Disney+ has a lot of kids that watch it, and the taste for us to consider advertising on something like Disney+ would be completely different than it might be on a Hulu. So then again, you take that individual, no one size fits all type approach that we are looking at across the world. And you say where do we have that opportunity? Where do we not have that opportunity? And then how does that change over time as we look at combining things or keeping things separate à la carte? And so all this is malleable. Again, it’s soft clay right now. And we are very pleased with what we are seeing with addressable advertising on Hulu.
And I would say that does that lead us to think big thoughts about what could happen in other markets across the world? Certainly, it does. But for right now, again, really happy with sort of the à la carte mode that we have with this bundling opportunity and keeping things the way they are, but that doesn’t say that in the future, we might not look at different opportunities for an increased level of addressable advertising across our platforms.
Disney’s streaming services are still adapting and changing. Advertising does bring in additional revenue, and with more streaming services around, offering an alternative tier at a lower price point could be something they introduce at a later date. For many households, having a cheaper alternative might mean they remain subscribed, which brings in less money directly through subscriptions, but advertising rates would offset that loss.
Much like with other streaming services, there are ad-supported and ad-free options available. It’s just that it costs more for subscribers not to be bothered by commercials.
There are many issues with introducing advertising into Disney+. A major issue is local restrictions. For example, in the United Kingdom, there are strict rules about advertising junk food before a certain time of the day or for responsible gambling. As Bob mentioned, Disney+ has lots of children viewers, making this a very sensitive subject. Another issue is that advertising is more localised, there isn’t much point in promoting a product in a country where it isn’t for sale.
Could advertising be added to Disney+ in the future? While currently, Disney+ is ad-free, Disney’s own CEO is very open about potentially changing things. That doesn’t mean to say it might happen or any time soon, but the option seems on the table.
Would you like Disney+ to have a lower-priced tier with advertising?