Disney+ launches its ad-supported tier to compete with Netflix

The day has arrived. Today, Disney+ launched its ad-supported tier, “Disney+ Basic,” at $7.99/month. The plan is currently only available in the U.S. and will become available in other countries sometime next year.

Image Credits: Disney+

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

Netflix has its work cut out for it if it wants to compete successfully with Disney+’s new ad-supported tier. For instance, Disney+ Basic not only lets viewers stream high-quality video, including Full HD, HDR10, 4K Ultra HD, Dolby Vision and Expanded Aspect Ratio with IMAX Enhanced, but it also lets subscribers stream on up to four supported devices simultaneously. Plus, the ad plan includes Disney+’s full content catalog.

Netflix’s ad-supported plan, on the other hand, only supports 720p HD video quality, subscribers can only stream on one device at the same time and around 5% to 10% of Netflix’s content library is missing due to licensing restrictions.

Neither Disney+ Basic nor Netflix’s “Basic with ads” plan allows offline viewing or downloads.

Other features not included in the Disney+ Basic plan at launch are GroupWatch, SharePlay and Dolby Atmos. A Disney spokesperson told TechCrunch that the company hopes to support this in the future, but the exact timing is unknown.

Ads will range from 15 to 30 or 45 seconds long, the spokesperson added. As we previously reported, Disney+ is limiting the total ad load to an average of four minutes of commercials an hour. Preschool content has zero ads.

Image Credits: Disney+

Also, the company revised the Disney Bundle. The Disney Bundle Duo (Disney+ Basic and Hulu’s ad plan) will cost $9.99/month. There’s also the Disney Bundle Trio Basic (Disney+ Basic, Hulu’s ad plan and ESPN+) will be $12.99/month and the Disney Bundle Trio Premium is priced at $19.99/month.

Alongside the launch, Disney+ increased the price of its Premium ad-free subscription to $10.99/month, up from $7.99. So while it may seem that Disney+ is launching a cheaper tier, the reality is that subscribers will have to pay the same price for a plan that will now get ads.

Research firm Kantar found that 23% of existing Disney+ subscribers plan to switch to the new tier, Deadline reported. That means more than 37 million subscribers could choose to pay the same price they always have but for an arguably “downgraded” subscription plan.

Hulu, the Disney-owned streaming service, also got a price hike, along with the Disney Bundle and Hulu Live TV.

The main reason Disney+ launched its ad-supported tier was to open up its streaming service to new subscribers. Disney previously said that the new tier will keep the company on track to reach its target of 230-260 million Disney+ subscribers by 2024. The streamer reported an impressive total of 164.2 million global subscribers in Q4 2022, which includes 46.4 million domestic subscribers.

Also, Disney’s direct-to-consumer division lost $1.5 billion, so the ad-supported tier is a potential new revenue stream for the company. The streaming giant boasted in today’s announcement that Disney+ Basic is launching with over 100 advertisers.

“Today, we welcome Disney+ with ads to the largest, most diverse and impactful portfolio in the industry. We are committed to connecting our clients to the best storytelling in the world while delivering innovation and viewer-first experience in streaming now and in the future,” said Rita Ferro, president of Disney Advertising.