NEW YORK— A cross-section of executives from the advertising, analytics and streaming industries reacted to the launch of Disney+’s new ad tier by suggesting it was a positive development for the streaming industry that would “accelerate” the ongoing shift of ad dollars from traditional TV to streaming.
“As Disney+ introduces a massive library of premium advertising inventory along the lines of some of the most beloved and recognizable franchises in history from Marvel to Star Wars, the movement of ad dollars out of traditional TV and into streaming will only accelerate,” asserted Dallas Lawrence, senior vice president of Samba TV in an email. “Disney knows the consumer and the advertising industry better than almost anyone, and now has the potential to capture a previously untapped audience as their ad-supported tier rolls out, especially younger, more affluent viewers. The exciting value proposition of Disney’s upcoming streaming ad model lies in the opportunity it offers to capture and monetize net new or lapsed subscribers. 9 out of 10 adults who do not currently have a Disney+ subscription watch other ad-supported streaming content today, indicating that these audiences have no reluctance to watch ads in exchange for free or reduced-price content and are prime candidates for to turn to Disney’s new ad-supported tier.”
“While Netflix has definitely gained more industry attention with its launch, that doesn’t mean marketers aren’t just as excited about Disney’s ad-supported tier,” explained Matt Spiegel, Executive Vice President of Media & Entertainment Vertical, TransUnion. “It is difficult to compare the two as Disney+ is more of an add-on strategy and the market expects more from Netflix after its long stance of remaining ad-free. Looking at the ad market from a macro perspective, this is business as usual for Disney who will get their own attention without competing against Hulu and its other media brands. Disney’s additional strategy should not emphasize the importance of the launch, but rather highlight Disney’s commitment to reinventing the TV business model and bringing together a complete portfolio of their solutions, into the ad-supported streaming ecosystem.”
The launch comes at a time when consumers’ decisions regarding streaming services are influenced by economics.
Although online streaming services are betting heavily on ad-supported accounts, the success of these services comes down to what the consumer prioritizes for spending, especially when layoffs occur, Laura Connell, head of consumer trends, GWI stated in an email. GWI found that 26% of unemployed people do not use any streaming services; meanwhile, those with the highest incomes were 1.6 times more likely to have 5+ subscriptions.
In terms of these spending priorities, GWI data shows that since 2011, the number of US consumers who have paid for a movie/TV streaming service has grown a whopping 356% (from 9% to 40%), and that by the fourth quarter of 2021, 66 % of US consumers reported watching subscription services in the past month, and 26% actively used Disney+.
In addition, Netflix remained on top in the US this time last year, with 58% of consumers in Q4 2021 reporting that they used the service, putting it significantly ahead of the competition, according to their research.
“Price increases are hitting many of the major streaming platforms heading into the holiday season, so affordable ad-supported tiers like the new Disney+ Basic plan will be attractive to many consumers,” explained Kevin Krim, president and CEO, EDO, a data, measurement and analytics company . “D+ is the fastest growing streaming platform right now and the Basic plan offers another step towards profitability.”
However, several executives also stressed that Disney has more work to do if it wants to thrive in the ad-supported streaming world.
“Disney has differentiated itself by being known as a family brand that has content suitable for all audiences,” explained Field Garthwaite, CEO and co-founder, IRIS.TV, a data platform built for video. “With their new ad-supported tier, Disney+ and Hulu will need to introduce features that address ad relevance and brand fit to maintain the same expectations audiences, brands and advertisers expect. Incorporating video-level content data into their advertising solution will help Disney increase the value of their new ad-supported alternatives, while reducing the risk of poor viewing experiences and brand sentiment by eliminating ad placements in inappropriate environments.”
Regarding Disney’s cross-platform empire and the streaming ad experience, EDO’s Krim noted that “Disney’s cross-platform empire blurs the lines between streaming and linear, giving them many ways to capitalize on a D+ hit like Andor, which aired two full episodes across Disney-owned ABC, Freeform, FX and Hulu recently.As the platform diversifies with popular franchises like Star Wars, Marvel, Pixar and Dancing with the Stars, it will continue to attract an even wider audience . To get these subscribers to stick around, Disney’s ad experience needs to be seamless for both consumers and advertisers. Indeed, most TV viewers are OK with seeing ads in exchange for lower subscription costs, but they still demand entertaining, engaging premium content and quality ads delivered with good technology.”
“Fortunately, Disney’s existing world-class advertising team is armed with innovative measurement solutions — like consumer engagement metrics — to ensure they are prepared to help their advertisers know what’s working across Disney’s streaming environment,” Krim added. “Creating customized, targeted ad experiences is already part of Disney’s strength, and something that will undoubtedly translate to their streaming offerings.”