By Adding Ads, Disney+ and Netflix Disrupt Streaming

In the space of a month, the world's two biggest SVOD streamers—Netflix and Disney+—have opened their platforms to marketers for the first time, each debuting an advertising-supported tier and ushering in a new chapter of the streaming wars. In March, Disney+ was the first to announce an ad-supported product, which debuted Dec. 8 in the U.S. and will expand internationally in 2023. But while Netflix didn't publicly hint at its own rival offering until April, the streamer managed to leapfrog Disney+ and roll out its ad-supported product a month earlier, on Nov. 3. Netflix’s ad-supported tier, Basic with Ads, costs $6.99 per month and has about four minutes of ads in pre- and mid-roll formats. Disney+’s offering has a similar ad load and costs $7.99 per month. And while buyers suddenly find themselves with more available inventory and a wider reach, the process hasn't been totally smooth sailing for them. Despite the similar time frame, "it's two very different strategies," said Samantha Rose, svp of strategic investment at Horizon Media. The new Disney+ tier costs the same as its ad-free offering previously did. (The House of Mouse hiked the price of its ad-free plan to $10.99 per month.) "Then to go non-ad-supported, it’s going to be more expensive, whereas Netflix offered a cheaper option" compared to its ad-free plans (which start at $9.99 per month). Little early info Netflix has already been touting advertisers' early response to its offering, telling shareholders in October that it "has been extremely positive and we believe that more choice, especially for more price-conscious consumers, will translate into meaningful incremental revenue and operating profit over time." But even though Netflix's tier has now been on the market for a little more than a month, buyers said they still don’t have a lot of information about subscribers and consumption on the platform. Likewise, Disney+'s days-old ad-supported product is too new to generate significant data yet. Regardless of the lack of initial information, Rose is optimistic about both ad-supported products coming to the marketplace. “For us, the big thing is, while we care about subscribers, it’s really about usage and time spent,” she added. Overall, Disney has 235 million subscribers across all its streaming platforms, with flagship streamer Disney+ reaching 164.2 million global paying customers. Netflix reported 223.1 million subscribers in the third quarter, offering its advertising tier in 12 countries at launch. And though Disney+'s product is slightly newer to the marketplace, the company has plenty of advertising experience on its side. “Disney, as an organization, has been around in the ad-supported game for a long time,” said Brad Stockton, svp of U.S. national video innovation at Dentsu. “They know how to set up and run a really great, smart ad-supported platform." A 'reasonable and smart' approach Despite the early optimism, several uncertainties lie ahead for both streamers as they jump into the AVOD space. Disney is debuting its new ad-supported tier just two-and-a-half weeks after the CEO who oversaw the offering—Bob Chapek—was stunningly replaced by his predecessor Bob Iger, leaving opening the possibility that Disney+'s ad strategy could change in the future. “Advertiser interest has been strong,” Chapek had said in November. “We also have proven technology to deliver a great advertising experience on day one.” How the Streamers Stack Up Now, nearly every major streaming service has an ad-supported offering, as they push for continued subscriber growth. Globally, Netflix has just more than 223 million subscribers.Disney has 235 million subscribers across its streaming platforms, including Hulu, ESPN+ and Disney+, which now all have ad-supported offerings.Warner Bros. Discovery's streamers—including HBO Max and Discovery+, which will merge next year—clock in at a combined 94.9 million subscribers globally.Paramount's flagship streaming service, Paramount+, has reached 46 million subscribers. NBCUniversal’s Peacock has 15 million paid subscribers. Meanwhile, buyers have been frustrated by the lack of promotion Netflix put into the new offering, and its quick rollout. “I think it’s going to be slow adoption there,” Rose said. “We’re just tracking to ensure that impressions have fired and been delivered. There’s very limited other reporting and measurement—things like attribution and all of those other things still remain to be seen.” However, for Dentsu, the hiring of Jeremi Gorman and Peter Naylor from Snap to lead Netflix’s advertising division was a brilliant move, with Stockton describing the pair as “absolute rock stars.” He added, “It's still really early; we know they're still ramping up their audiences from the ad-supported product." Despite questions on reporting, measurement consumption and usage, the platforms hope a cheaper offering will incentivize new subscribers and the return of customers who may have churned off, and buyers are excited about the additional inventory coming back to market. “There was talk about the shift from linear to streaming and how that was really reducing the amount of available inventory in the marketplace,” Rose said. “We're excited because it’s bringing back supply to the market, but we’re also being reasonable and smart about where we're investing.” Everything You Need to Know About Using Netflix’s Ad Tier

Streaming & OTT

By Adding Ads, Disney+ and Netflix Are Disrupting the Streaming Industry—Again

The new advertising tiers offer cheaper options and more inventory, but many questions remain

Mollie Cahillane

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Mollie Cahillane