Most Disney + subscribers will take the cheaper ad-based plan, says the CFO
Disney expects that in the long run, the majority of Disney + customers will opt for the less expensive, ad-supported plan, which will be launched later this year.
“Based on our Hulu experience, we actually have more AVOD [ad-supported video-on-demand] than SVOD [subscription VOD] subscribers, “said Disney CFO Christine McCarthy, who spoke at the 9th annual MoffettNathanson Media and Communications Summit on Wednesday.
A few years ago, Hulu revealed that 70% of viewers had ad-supported plans, while the rest at the more expensive ad-free levels. McCarthy said Disney + ad inventory will be sold at a premium, which will “increase” the average revenue per subscriber it expects to generate. “We feel really good about this opportunity,” she said.
Since announcing plans to roll out Disney + with ads in March, the company has largely been the mother of details about Disney + with ads, including the price. The company has only said that it will be cheaper than the ad-free version (currently $ 7.99 / month in the US) and will not debut until the US until the end of 2022.
Variety reported this week that the ad-supported version of Disney + will not accept alcohol or political advertising at launch, nor will it run ads from rival streamers or entertainment studios.
At the MoffettNathanson conference, Rita Ferro, president of Disney Advertising Sales, said that the Disney + ad-supported level will have an average of four minutes per hour outside the gate – a lighter load than Hulu – and confirms Variety report. This is partly because 65% of the screenings at Disney + are movies, which have fewer commercial breaks than series, she said.
The ad-supported Disney + service starts with 15- and 30-second slots, but will expand to a “full package of ad products” over time, Ferro said. Since Mouse House announced the ad-supported level, she said: “The response has been extraordinary” from advertisers and brands.
Regarding child-targeted ads at Disney +, Ferro said: “Yes, we will have advertising … for children, but there will be controlled advertising with many parental controls to pull. We will not collect data about it. . » She added that there will be no advertising in preschool content on Disney + at the launch.
Disney + will be in around 150 markets by the end of 2022, according to McCarthy, following a major international expansion this summer in a further 42 countries and 11 territories across Europe, West Asia and Africa. As of April 2, Disney + had 137.7 million paying subscribers, an increase of 33% from year to year and a gain of 7.9 million in the first three months of 2022.
At Disney’s quarterly earnings attempt last week, CEO Bob Chapek teased that a completely direct to consumer ESPN offer is on the roadmap. “We know that at some point when it’s going to be good for our shareholders, we will be able to fully enter into an ESPN DTC offer,” he said. “And we have full faith that there is a business model there for us that will enable us to regain growth on ESPN + in a complete DTC expression.” At the MoffettNathanson conference, McCarthy said that Disney has no set timeline for introducing a full ESPN streaming service, which would be “another product” – one that would have a higher price than today’s ESPN + ($ 6.99 / month).
Meanwhile, the decision to put projects into theatrical versus streaming distribution is “not one size fits all,” McCarthy said at the conference. Today, the best performing films at the box office have been action, superhero and adventure titles, she said, and recently quoted the Marvel movie “Doctor Strange in the Multiverse of Madness”. It’s “not necessarily the same for, let’s say, adult dramas,” McCarthy said. “Some of these people say, ‘I like watching them at home.'”