Disney Sets Disney+ Ad-Supported Tier Debut Date, Streamer Price Hikes

Disney+'s ad-supported tier is on the way—and so are price increases across all of Disney's streaming services. The company revealed a Dec. 8 release date for its highly anticipated ad-supported tier, as well as streaming price hikes, during its quarterly earnings call on Wednesday afternoon. Plus, Disney now has 221 million total subscribers across its streaming portfolio, including Hulu, ESPN+ and Disney+ Hotstar. The new pricing to roll out in December includes Disney+ (with ads) at $7.99 per month, $10.99 (no ads) and $109.99 annually; Hulu (with ads) at $7.99 per month or $79.99 annually and Hulu Premium (no ads) at $14.99 per month; and ESPN+ (with ads) for $9.99 per month or $99.99 annually. Additionally, UFC PPV will come in at $74.99 per event, and UFC PPV+ will be $124.98 annually. In terms of Disney Bundle Plans, the Basic plan (with ads) for Disney+ and Hulu will be $9.99 per month, and adding ESPN+ to that will be an additional $12.99 per month. In a Legacy package, existing subscribers will pay $14.99 per month for Disney+ (no ads) and Hulu and ESPN+ (with ads), while a package with Disney+ and Hulu (no ads) and ESPN+ (with ads) will be $19.99 per month. Disney Closes Strongest Upfront Ever With $9 Billion in Commitments Disney+'s current ad-free version costs $7.99 per month or $79.99 annually. The Disney streaming bundle, which combines subscriptions to Disney+, ESPN+ and the ad-free tier of Hulu, remains unchanged at $19.99 a month. Disney previously announced the price hike for ESPN+ to $9.99 per month in July. The ESPN+ price hike is effective as of Aug. 23, and the Hulu price changes take place Oct. 10. Hulu+ Live TV will also introduce a new Basic (with ads) plan on Disney+, Hulu and ESPN+ for $69.99 per month. The Premium plan with Disney+ and Hulu (no ads) and ESPN+ (with ads) will be available for $82.99 per month, and existing subscribers will have the Legacy package of Disney+ (no ads) and Hulu and ESPN+ (with ads) for $74.99 per month. 'A lower ad load and frequency' "We are taking a thoughtful approach by launching with a lower ad load and frequency to ensure a great experience for viewers. This approach, coupled with strong advertiser demand, translated into Disney+ earning industry-leading CPM rates at the most recent upfront," Disney CEO Bob Chapek said on the call. The company first announced the Disney+ ad-supported subscription offering in March, saying it would expand internationally in 2023. Disney previously confirmed to Adweek several features of the upcoming ad-tier product, including an average of 4 minutes per hour and no ads on programming catering to preschoolers at launch. Disney reiterated during the earnings call that the ad-supported tier would launch with a lower ad load and frequency. Chapek said the company is going conservatively for the initial ad load; however, he added there might be some "elasticity" moving forward. Still, the CEO doesn't expect the increased prices to affect churn for the streaming service. "We believe because of an increase in the investment over the past two and a half years, relative to a very good price point, that we have plenty of room on price value, and we do not believe that there's going to be any meaningful long-term impact on our churn as a result," Chapek said. "One only needs to look at our recent significant increase on ESPN+, which had ... really no meaningful impact at all on our churn. And we believe that we've got plenty of price value room left to go." The content investment is evident in Disney+'s success with its Marvel series. Chapek noted that each new original Marvel show attracts incremental viewership and new subscribers that previously didn't engage with Disney+'s Marvel content. The company looks at Hulu as an example of pricing not affecting its subscribers. "Based on our Hulu experience, even current subscribers who have ad-free may choose to stay at the same price point with ads. The Hulu ad-supported tier has more subscribers than the ad-free. In fact, it's well over. It's about two-thirds," said Christine McCarthy, Disney senior evp and CFO. "And that's something that we can't anticipate that we'd have exactly the same behavior because it's a different demo that has Disney+ versus Hulu, but that's the best indication that we have. But we expect the ad tier to be popular. And we also expect some people to want to stay with that free." Disney recently closed its strongest upfront ever, taking in $9 billion in advertiser commitments, and the company's streaming services, including Disney+'s ad-supported tier, were a significant part of that. The company reported 40% of total upfront dollars going to streaming and digital because of Disney+, ESPN+ and Hulu. 221 million global streaming subscribers In terms of subscribers, the company reported 14.4 million Disney+ subscribers added in the fiscal third quarter and 15.5 million added across its channels. Disney+ subscribers have now grown to 152.1 million, and the company has 221 million total subscribers across its streaming portfolio, including Hulu, ESPN+ and Disney+ Hotstar. The company also noted that Disney+ is now available in 155 markets thanks to recent global launches. ESPN+ rose from 22.3 million subscribers to 22.8 million, and Hulu, which operates only in the U.S., went from 45.6 million subscribers to 46.2 million. The gains come in stark contrast to the industry at large. In their second quarter earnings call in July, Netflix, the world’s largest streaming service, reported 220.67 million global subscribers, a loss of nearly 1 million and the streamer’s biggest subscriber drop ever. However, the news beat Netflix's previously projected dip of 2 million. Adjusting long-term streaming goals Amid the positive subscriber gains, Disney has revised its long-term subscriber outlook—a previously announced target of 230-260 million subscribers for the fiscal year 2024—in light of the company recently losing digital rights to Indian Premier League (IPL) cricket, only retaining the broadcast rights from 2023-2027. The IPL helped Disney+ Hotstar, the company's Indian streaming service, become India's largest streamer, and the loss of those rights will impact overall subscriber numbers. Disney has separated its forecast into two categories: Disney+ and Disney+ Hotstar. It forecasts 135-165 million core Disney+ subscribers in that time frame, with up to 80 million Disney+ Hotstar subscribers by the end of fiscal 2024. But that reduces its overall forecast to 215-245 million.