Key facts
- Disney is exploring the creation of a free streaming service to reach price-sensitive customers.
- A free offering could help Disney+ grow its subscriber base and increase ad revenue.
- Netflix is also considering a free streaming product but is wary of impacting its paid subscriber base.
- Both streaming giants have implemented several price increases in recent years.
- Customer dissatisfaction with rising subscription costs has led to increased adoption of free ad-supported streaming services.
Disney is actively exploring the introduction of a free streaming service to capture a more price-sensitive audience and enhance its advertising revenue. CEO Josh D’Amaro stated that this move is a strategic priority, aiming to attract new customers and potentially drive growth for its paid Disney+ subscriptions.
This consideration comes as streaming services face challenges with plateauing subscriber numbers, increased churn, and intense competition. A free tier could differentiate Disney+ from rivals like Netflix and HBO Max, which have also been subject to customer frustration over escalating prices. Disney executives have not yet detailed the specifics of such an offering, but reports suggest some content might be made available without a paywall.
Netflix is also cautiously evaluating a free streaming product, with co-CEO Greg Peters emphasizing the need for careful consideration regarding cannibalization of paid tiers and the importance of a robust ad business. Both Disney+ and Netflix have implemented multiple price hikes in recent years, contributing to customer dissatisfaction and a growing demand for free, ad-supported alternatives like FAST services. Parks Associates data indicates significant adoption of FAST services, with a majority of US respondents using ad-supported tiers or AVOD/FAST platforms.