Disney+ enters new phase of streaming strategy as AVoD tier goes live

Star Wars adventure series Andor

Disney+’s ad-supported tier launched in the US yesterday as parent The Walt Disney Company chases profitability in its direct-to-consumer business.

The Mouse House said more than 100 brands and agencies are advertising on the newly launched tier (called Disney+ Basic), which costs US$7.99 per month.

The new tier will feature the same programming as the ad-free version, including Andor, Moon Knight, The Book of Boba Fett and The Santa Clauses.

At the same time as launching the AVoD tier, the monthly price of Disney+’s ad-free tier was increased to US$10.99, from US$7.99.

Disney+ also announced pricing for several other streaming bundles, including a US$9.99 per month bundle combining Disney+ and Hulu, both with ads.

Advertisers from across more than a dozen categories are on the ad tier including Dentsu, Havas, Horizon, IPG, Omnicom Group, Publicis, RPA, Stagwell and WPP.

The launch of the AVoD tier comes with Disney+ facing pressure from investors to attain profitability. While the service added more than 12 million subscribers in the fourth quarter, its direct-to-consumer losses widened to US$1.47bn, up from US$1.1bn in the third quarter.

The widening losses, coupled with a falling share price, contributed to the departure of CEO Bob Chapek, who was replaced with returning CEO Bob Iger last month.

According to research from data analytics firm Kanter, around a quarter of Disney+ subscribers in the US could switch to the ad-supported tier.

“Today’s launch marks a milestone moment for Disney+ and puts consumer choice at the forefront,” said Disney’s president of direct-to-consumer, Michael Paull.

“With these new ad-supported offerings, we’re able to deliver greater flexibility for consumers to enjoy the full breadth and depth of incredible storytelling from The Walt Disney Company.”