This past week, Disney has hosted a special tech and data showcase as part of its Upfront presentations to advertisers for its linear and streaming services. A major part of this presentation has been boasting about how they’ve been developing better technology to make advertising better, with programs like its Disney Real-Time Ad Exchange (DRAX) and Disney’s Clean Room solution.
Most of the focus has been on how to get advertisers to make the most out of Disney’s content consumers, across traditional television channels and through Hulu. Disney has been spending lots of money on developing its technology to increase its advertising income, which wouldn’t make much sense, if Disney was planning on just closing down Hulu and linear television channels audiences shrink?
Currently, Disney+ doesn’t have ads on the service, unlike many other streaming services like Peacock, Amazon, Discovery+, HBO Max and Paramount+, which offer a premium tier without ads and a cheaper version with ads. And now, apparently, Disney+ is also under consideration for an ad tier.
According to the Information, an ad-tier is being discussed for the United States. There have been lots of discussions lately about how Disney is going to manage running both Disney+ and Hulu in the US. Up until recently, mature content went to Hulu, and family-friendly content went to Disney+. But later this month, Disney+ is getting an update to its parental controls, to add more mature content, including the former Netflix Original series, “Daredevil”. Blurring the lines even more. Internationally, Disney+ already offers mature content from studios like 20th Century, FX and ABC, which has brought great success to Disney+ on many levels.
One of the most interesting facts that come out of Disney’s quarterly investor calls, is how Disney make more per Hulu subscriber on the ad tier than on the more expensive ad-free tier.
With more streaming services around, many TV executives feel that many people will be willing to sit through commercials if they are paying less or even nothing.
While Disney+ currently costs $8 a month, it’s likely to increase should it merge with Hulu. However, if there is a cheaper option available, with ads, it might appeal to more subscribers in the long run.
Another advantage for having an ad tier within Disney+, is that it is another revenue stream for the company and subscriber numbers are less important, if Disney can increase the money it makes per subscriber.
Recently Antenna data revealed that consumers are increasingly opting for less expensive, Ad-Supported Subscriptions and now account for 32% of all Premium SVOD Sign-ups in 2021.
Disney hasn’t officially announced its considering advertising for Disney+, but the advertising model is working for streaming services, and Disney already has had lots of success with Hulu’s ads. Should they eventually merge, Disney would be losing millions in revenue from commercials.
Since Disney+ launched in 2019, there have been many changes, with the pandemic speeding cord-cutting and Disney going all-in on streaming, under a new CEO. Disney+ is going to continue to adapt and change moving forward.
Would you like to see Disney+ and Hulu merge, with a cheaper ad tier?