When Disney+ recently dropped a price increase on subscribers in August, the House of Mouse notably didn’t up the cost of its ad-supported tier. That plan stayed at $7.99/month and Disney CEO Bob Iger didn’t hide the reason why.
“We’re actually keeping the advertiser-supported product flat in terms of prices,” Iger told investors during Disney’s latest earnings call via The Verge. “We’re obviously trying with our pricing strategy to migrate more subs to the advertiser-supported tier.”
In layman’s term, Disney+ was banking on more users going for the less-costly ad-supported plan, and it appears to be working. In a new interview with The Hollywood Reporter, Disney’s new President of Global Advertising Rita Ferro said that over half of the streaming platform’s users are on the ad plan and actively using it:
Ferro says that more than 50 percent of new subscribers to Disney+ are choosing the ad tier (that is up from 40 percent earlier this year), and that engagement on the ad version of the streaming service has increased by 35 percent since March.
“Engagement is one of the key metrics for advertising, so it’s a really important metric that we track,” Ferro says.
The strategy reflects the changing winds across the streaming business as more and more platforms turn to ad-based plans to boost revenue. Turns out, the advertising model of yore was pretty lucrative, and the streaming companies are finding it to be a better alternative than having users pay higher prices for ad-free plans.
(Via The Hollywood Reporter)