Disney’s Big Reveal: Ad-Supported Streaming Service
Amidst falling profits, Disney+ is set to launch a more affordable streaming option with advertisements in the UK in November, following a model already available in the US. This new tier, priced at £4.99 per month, will also be introduced in Europe and Canada. However, existing UK customers will face a £3 price increase to retain their current benefits. Disney+ also aims to tackle password sharing, taking a cue from its competitor, Netflix.
The move comes as Disney faces various challenges, including underwhelming film performance and a significant decline in advertising sales in its traditional television business. While overall revenue showed a 4% year-on-year growth for the quarter ending July 1, the company posted a loss of $460 million (£361 million), compared to a $1.4 billion profit during the same period last year.
Disney+ in the UK currently offers a single pricing tier at £7.99 per month. However, starting in November, three new tiers will be available:
- Standard with Ads: Priced at £4.99 per month, this tier offers 1080p video quality and allows two people to watch on different devices simultaneously.
- Standard: Priced at £7.99 per month, this tier provides the same features as the ad-supported option but without ads and with the ability to download videos for offline viewing.
- Premium: Priced at £10.99 per month, this top-tier option offers 4K video quality, downloads, and the ability to stream on up to four different devices simultaneously.
For existing subscribers in the UK who currently enjoy the features of the new premium service, retaining these benefits will result in a £3 per month price increase.
Disney’s decision to introduce an ad-supported service follows Netflix’s similar strategy implemented last year. Netflix took such measures, including cracking down on password sharing, when subscriber growth began to slow in 2022.
While Disney highlighted progress in its streaming business, with losses halved from a year ago to about $500 million in the three months to July 1, the company acknowledged disappointing performances from recent films. Disney+ subscriptions grew internationally by 1%, offsetting a 1% decline in the US, bringing the total to 105.7 million.
Analysts noted the company’s mixed results and emphasized the need for clarity on Disney’s strategy for its streaming services and TV networks. CEO Bob Iger, expressing confidence in Disney’s long-term trajectory, acknowledged the challenges ahead, signaling the company’s commitment to addressing them and ensuring sustained growth.
