The new ad-supported subscription tier comes at a cost – the same cost as before to stay ‘ad free’. What steps can marketers take to craft their message in a high attention environment without disrupting the value for the viewing they are trying to reach?
by Sarah Dennis 16 August 2022
Last week, Disney confirmed it was following Netflix down the ad-funded rabbit hole, with a new subscription tier in the US launching on 8 December, with plans for this to roll out globally in 2023.
Billed as giving consumers “more choice to consumers than ever before”, the new tier will replace the current Disney+ ‘basic’ at $7.99 a month. The ad-free tier that consumers currently view at that price will be bumped up to $10.99 a month.
Dismissing concerns that consumers will be put off in the long run, Disney CEO Bob Chapek pledged a “conservative” rollout of ad load in an earnings call with investors last week, citing the success of the format on Disney+ stablemate Hulu as a pointer.
“We are walking before we run in terms of seeing what the market will bear in terms of an ad load. So we're going in very conservative upfront. But we believe that there's probably going to be some more ultimate elasticity in that, as well as we go forward. By taking a conservative approach in terms of that ad load upfront, it will give us the ability to expand if we need to and not have to go the other way, which I think would be a much bigger deal.”
The move itself is not a surprising one – not least because Disney+ announced its intentions to incorporate ad support in its services earlier this year. But how does the introduction of an ad tier – at the same expense as for those who had previously enjoyed ad free viewing – weigh up for consumers who may be considering the value of their subscription services at a time of a cost-of-living crunch?
PMW spoke to industry experts to get their take on the future of ads and subs – can the two play together happily and how can marketers navigate the messaging mix?
“The overall package provides a net benefit while maximising value to content”
Dan Goman, CEO of cloud-native digital media supply chain and distribution platform Ateliere is clear: there is no ‘downgrade’ in service, providing there is choice. “I think this is a positive opportunity, if it's an opt-in option, so, for certain, consumers who don’t care for the advertising option can continue to view their content advert-free."
The new Disney+ tier will not be an isolated incident, he adds, citing ads woven into subscription or streaming services – with a premium to go ad ‘cold turkey’ – as the move of the future.
“It all comes down to optimising the experience for the various types of consumers against a backdrop of real-world costs for content. Some consumers will be more open to advertising than others, and if they are willing to accept the adverts, then they will be happier to have a discount on their subscription. In fact, the overall package provides a net benefit to them, while still maximising value back to content.”