Disney+ to offer ad-supported streaming tier before year’s end

Disney+ original The Mandalorian

Disney has unveiled plans to add an AVoD tier to Disney+ before the end of the year, marking the first time the company has deviated from an SVoD strategy for the streaming service.

Disney said the ad-supported tier will launch in the US in late 2022 before expanding globally in 2023. Pricing details have not yet been announced.

The company said the AVoD tier is “viewed as a building block” on its path to achieving its long-term target of 230 to 260 million subscribers by fiscal 2024.

Last month, Disney said the total number of subscribers had reached 129.8 million in the first quarter of 2021, an increase of 11.8 million from the previous quarter.

While an ad-supported tier is a first for Disney+, it is a standard part of the business model for its other streaming platforms, Hulu and ESPN+.

“Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone – consumers, advertisers, and our storytellers,” said Kareem Daniel, chairman of Disney Media and Entertainment Distribution.

While Disney’s biggest streaming rival, Netflix, does not have an ad-supported tier, the majority of its streaming competitors do provide some kind of AVoD offering, including Peacock, Paramount+, Discovery+ and HBO Max. Apple TV+ and Amazon Prime Video are also SVoD-only.

“Since its launch, advertisers have been clamouring for the opportunity to be part of Disney+ and not just because there’s a growing demand for more streaming inventory,” said Rita Ferro, president for advertising at Disney Media and Entertainment Distribution.

“Disney+ with advertising will offer marketers the most premium environment in streaming with our most beloved brands, Disney, Pixar, Star Wars, Marvel and National Geographic. I can’t wait to share more with advertisers at the upfront.”

Earlier this year Disney confirmed that Disney+ will expand into a further 42 countries this summer, including South Africa, Turkey, Poland and Saudi Arabia.