Disney+ Explores Free Ad-Supported Tier to Expand Reach and Ad Revenue

Disney+ Considers Free Tier

Disney CEO Josh D'Amaro confirmed that Disney is exploring a free, ad-supported streaming product for Disney+. This announcement was made during an earnings call, following earlier reports from Business Insider in July that Disney's Chief Product & Technology Officer, Adam Smith, had discussed enabling free-tier content during a company town hall.

Strategic Objectives

The primary objectives for introducing a free tier include expanding the streaming service's reach to a customer segment that is more price-sensitive and increasing advertising revenue. D'Amaro stated that more ad inventory would help accelerate ad revenue growth, as Disney is currently well-sold on its existing ad space.

Additionally, a free offering is intended to drive top-of-funnel Disney+ subscriber growth by building awareness and removing the initial friction of a paywall. The strategy is to convert curious newcomers into paying customers once they are regularly using the app.

Competitive Landscape

Disney+ faces increasing competition from free-to-watch services such as YouTube, which has been expanding its platform to resemble traditional TV. Other major streamers, including Paramount+ and Netflix, are also exploring similar free or ad-supported models. Paramount's flagship streamer reportedly plans to expand access to content for non-subscribers, and Netflix co-CEO Greg Peters mentioned that a free offering could make sense in some markets.

Future Outlook

While D'Amaro confirmed that Disney is actively considering a free tier, he noted that there is "nothing specific to announce today." The exploration signifies a strategic shift to address plateauing subscriber numbers and subscriber churn, aiming to maintain growth and engagement in a competitive streaming market.