The Walt Disney Company announced today that it will offer an ad-supported subscription to Disney+, in addition to its current ad-free option. The lower-priced service will launch in the U.S. in late 2022, with plans to expand internationally in 2023.
Why are they doing this now? The company has previously told investors that it has a long-term target of 230-260 million Disney+ subscribers by September 2024 (the end of the company’s fiscal year). The gameplan has gone well thus far – Disney added 11.8 new subscribers for the quarter ending January 1, 2022 and its subscriber base grew 37% for the full year to 129.8 million – however a lower-priced tier is additional insurance to ensure that Disney+ can keep adding subscribers at the current brisk pace. The company calls this latest move a “building block in [its] path to achieving its long-term target.”
Rich Greenfield, a financial analyst who follows the company closely, shared these thoughts about the new pricing model: