Walt Disney Co. (DIS) says it is adding a cheaper, advertising supported subscription tier to its Disney+ streaming service.
The new streaming tier will be introduced later this year to complement the current $8 U.S. per month advertising free subscription. The company said the ad-supported option would widen to Disney+ internationally next year (2023).
Disney didn’t specify the new tier’s price or launch date, nor did it indicate whether the ad-supported tier’s introduction would affect how much an ad-free membership costs going forward.
Adding a cheaper option for Disney+ is designed to make it easier for price-sensitive people to sign up. As the ranks of streaming services have swelled in the last two years, the number of services that people must consider adding to their monthly budgets has gone up.
Disney+ is already among the cheapest streaming services, and Disney executives have said that the streaming platform’s subscription price would rise as the service brings on more original programming.
Lowering the price hurdle to sign up new members is especially important for upstart services like Disney+. Cheaper subscription tiers with advertising revenue can also be more profitable than the ad-free tiers, and Disney already has a long track record with the practice. Its Hulu service has offered a cheaper, ad-supported level for several years now.
Disney+ currently offers a single option for an ad-free subscription, which in the U.S. is priced at $8 a month or $80 a year. By comparison, Netflix (NFLX), which has no ads, offers its cheapest tier at $10 U.S. a month, while its most popular plan is $15.50 U.S.
Only Apple (AAPL) TV Plus, at $5 U.S. a month, is cheaper than Disney+ among the main streaming services.
