Disney+ Launches Ad-supported Tier

Business

Disney+ (DIS) has officially launched its ad-supported tier. The latest new offering , which follows one month after Netflix’s (NFLX)’s ad-supported debut, costs $7.99 per month, $3 less than the ad-free version of Disney+ which now costs to $10.99 per month.

“Price hikes are hitting many of the major streaming platforms heading in the holiday season, so affordable ad-supported tiers like the new Disney+ Basic plan will be attractive to many consumers,” Kevin Krim, CEO of advertising measurement platform said. “Disney+ is the fastest growing streaming platform right now, and the Basic plan offers yet another step toward its profitability,” Krim added.

According to a new study by Kantar Research, about 1 in 4 current Disney+ subscribers will trade down to the ad-supported version — translating to roughly 46 million of the streamer’s total 164 million user base.

Industry experts argue offering lower-cost, ad-supported options are still an important hedge against churn — something all streamers want to avoid amid increased competition.

On Tuesday, Netflix Co-CEO Ted Sarandos teased there could be more ad-supported offerings for the leading streaming service, telling investors at a UBS conference: “We have multiple tiers today. So it’s likely there will be multiple ad tiers over time, but nothing to talk about yet.”

Netflix’s ad tier, competitively priced at $6.99 a month, comes with a few downsides like the inability to download movies and TV shows. Additionally, due to increases across countries, about 10% of overall content is not available for users in the ad tier.

In its most recent fiscal year, losses for Disney’s direct-to-consumer unit, which includes Disney+, Hulu, and ESPN+, totaled $4 billion for the year.

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