Disney disclosed plans to investigate launching a free, ad-supported streaming product during an earnings call with investors on Wednesday. Chief Executive Officer Josh D’Amaro characterized the initiative as a strategy to penetrate a more price-sensitive customer segment while advancing the company’s objective of expanding market reach. D’Amaro emphasized that Disney possesses greater advertising inventory compared to numerous competitors in the ad-supported streaming space, positioning the company to potentially accelerate advertising revenue expansion.
The proposed free offering would serve as a mechanism to bolster the top-of-funnel growth of Disney+ subscribers, according to D’Amaro, though he refrained from making formal announcements regarding implementation. The consideration of such a product aligns with industry trends, as free ad-supported services such as Tubi, Pluto TV, and The Roku Channel have been attracting audiences amid rising streaming costs across the sector. Concurrently, major streaming platforms including Netflix and Disney+ have made cheaper, advertisement-inclusive tiers increasingly central to their business models for customer acquisition and profitability enhancement.
During the same earnings call, Disney announced the complete sale of advertising inventory for the upcoming Super Bowl, scheduled to air on ABC and ESPN networks in February. Thirty-second commercial spots commanded $9 million each. Chief Financial Officer Hugh Johnston reported satisfaction with advertiser commitments from recent upfront negotiations and noted that volume commitments increased in double-digit percentages compared to the prior year period.
Johnston attributed advertising strength to marquee live events including the College Football National Championship, the Grammys, and the Oscars. Nevertheless, he characterized the sports advertising market as robust while acknowledging heightened competition in the streaming sector driven by expanded inventory supply. The proliferation of streaming advertising options has applied downward pressure on rates, with lower advertisement costs contributing to revenue challenges for Disney’s entertainment division during the quarterly period.
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