Disney weighs free ad-supported streaming, says it has sold out Super Bowl ad spots
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Disney could soon make a bigger play into advertising.
During an earnings call with investors on Wednesday, CEO Josh D’Amaro said the company is exploring a free, ad-supported streaming product for consumers.
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“We see it as a way to expand our reach to a customer segment that’s more price-sensitive, and expanding our reach … is one of our strategic priorities,” D’Amaro said.
He added that unlike many of Disney’s ad-supported competitors, the company has more ad inventory that “would actually help us accelerate our ad revenue growth.”
“A free offering could help us drive top of funnel Disney+ subscriber growth,” D’Amaro said, though he fell short of making any official announcements. Business Insider earlier reported that Disney was considering a free offering.
Free, ad-supported streaming services like Fox Corp.’s Tubi, Paramount Skydance’s Pluto TV and Roku’s The Roku Channel have been garnering more viewers as the cost of streaming has risen across various services.
Cheaper, ad-supported plans for major streaming players like Netflix and Disney+ have also become increasingly important to attract more customers and boost profitability.
Advertising for live sports and streaming has remained strong, even in a more competitive environment.
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Disney also announced Wednesday that it has sold out ad spots for the upcoming Super Bowl, which will air on the company’s ABC and ESPN networks in February.
The Super Bowl has long beckoned the highest ad rates of any live TV programming. This year 30-second spots have reportedly been sold for $9 million.
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Disney CFO Hugh Johnston told investors on Wednesday that Disney was “pleased” with commitments from its recent Upfront negotiations and noted volume commitments were up double-digits compared to last year.
He added other marquee live events, such as the College Football National Championship, the Grammys and Oscars helped to drive ad sales.
“Overall, the current tone I would have is to characterize the market is healthy in sports,” Johnston said on Wednesday’s call, “but at the same time, competitive in streaming, especially given the growth of supply in the marketplace.”
Johnston added the increased streaming supply has led to pricing pressure for ads. Disney reported in Wednesday’s quarterly earnings that lower ad rates weighed on revenue for its overall entertainment unit.
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