Disney explores free ad-supported streaming as Super Bowl ads sell out
Disney is considering a free streaming product funded by advertising while reporting a sold-out Super Bowl ad slate.
By Theo Nakamura · Staff Writer
· 3 min read
Disney free ad-supported streaming is under consideration, Chief Executive Josh D’Amaro told investors, signaling that the company sees advertising as a larger part of its streaming business. For investors, the key point is that Disney has not launched a new service or disclosed a timeline, price, programming plan or whether it would sit inside Disney+ or operate separately.
D’Amaro discussed the possibility on the company’s earnings call, a forum where management reviews results and strategy with investors. A free option could help Disney reach viewers who are more sensitive to subscription prices, he said, and could bring more potential customers into the Disney+ pipeline. Learn what an earnings call is and why executives’ comments there can matter to shareholders.
The proposal would follow a familiar streaming model: viewers watch programming without a monthly fee, while advertisers pay to reach them. D’Amaro said such an offering would add advertising inventory, meaning more available commercial time that Disney could sell, and could support ad-revenue growth.
Disney has not committed to launching the product. Its comments describe an exploration, not a confirmed change to paid Disney+ plans.
What would Disney free ad-supported streaming mean for viewers?
A free, ad-supported streaming service generally trades a subscription payment for commercial breaks. Services such as Fox’s Tubi, Paramount Skydance’s Pluto TV and Roku’s The Roku Channel already use that approach. CNBC reported that those services have gained viewers as streaming costs have increased.
Disney’s potential version remains undefined. The company did not say which shows or films might be included, when a product could arrive, or how it would relate to Disney’s existing paid streaming offerings.
Disney points to demand for live sports advertising
Alongside the streaming discussion, Disney said it had sold all advertising inventory for the upcoming Super Bowl telecast, scheduled for ABC and ESPN in February, CNBC reported. The sellout gives Disney a high-profile example of advertiser demand for live sports, a category that can draw large real-time audiences.
Variety reported in May that Disney had sold more than 10 30-second Super Bowl spots for about $9 million each, citing people familiar with the talks. That figure was reported pricing for some slots, not a confirmed rate for every commercial or a company-wide average.
Chief Financial Officer Hugh Johnston said Disney was pleased with commitments from the recent Upfront advertising market, and that volume commitments had risen by a double-digit percentage from a year earlier. He also cited events including the College Football National Championship, the Grammys and the Oscars as contributors to ad sales.
Still, Disney described two different advertising conditions. Johnston said the sports market was healthy, while streaming advertising was competitive because the amount of available ad space has grown. He said that additional supply had put pressure on pricing, and Disney reported that lower ad rates weighed on revenue in its overall entertainment unit.
The combination shows Disney pursuing more advertising reach while confronting a crowded streaming-ad market. A free service could expand the company’s audience and commercial inventory, but management has yet to provide the operating details that would show how, or when, that strategy might take shape.
This story draws on original reporting from CNBC.
