According to reports, Disney has previously launched Disney+ to enter the global online video market, and according to a person familiar with the matter, the company is preparing to launch a new membership product that is cheaper but will feature ad breaks.
According to Disney’s goal, the company plans to achieve profitability in consumer direct sales (mainly online video) in 2024, and the launch of a low-priced version of the membership product will reinvigorate the growth of paid video memberships.
According to reports, the competition in the online video market in the United States is becoming more and more fierce. Before Disney, WarnerMedia (part of AT&T), Paramount Global, NBC Universal, Discovery, etc. have launched member products with in-stream advertisements. Can continue to compete for members. Disney has also joined this new wave of the industry.
About ten years ago, the mainstream of the online video industry was the ad-free membership model, represented by Netflix. Disney’s ad-slip membership this time is also a signal that the online video industry is shifting from ad-free members to ad-slip members, whose business model is also more similar to traditional TV channels with ad spots.
Behind such industry changes is a new understanding of video industry executives: if online video can be watched at a low price or even free, then consumers are willing to accept a certain amount of video advertisements.
In its “Peacock Video” service, NBC Universal has launched a free advertising membership service. In addition to paid members, Amazon also has a completely free video service “IMDB TV” supported by advertising revenue.
But today, Netflix has become a special case and has not launched low-priced ad insert members. The company’s management has also made it clear before that it will not launch ad insert members in the future.
Currently, members of the “Disney+” video service cost $8 a month. In contrast, competitors such as “Discovery+” and “Paramount+” offer ad-supported memberships for only $4.99 per month.
It is worth mentioning that Disney owns three major online video products, in addition to “Disney+”, Hulu and ESPN+. Currently, Hulu has an ad insertion membership that costs $6.99 a month.
The media pointed out that “Disney+” is expected to attract more consumers to sign up for members by launching low-priced ad insert members, which can help Disney expand its revenue and make up for the rapidly growing cost of video content production. A Disney spokeswoman was not available for comment on the upcoming launch of ad-sleeve memberships.
Disney has previously said that by 2024, the company will spend more than $8 billion to $9 billion a year on content on the “Disney+” platform. Over the past five quarters, Disney+’s quarterly programming and production spending rose 78 percent to $920 million, the company disclosed.
In addition to premium content, Disney is taking several steps to stimulate membership growth. At the end of last year, the company launched a promotion that gives consumers a discount on Disney+ or ESPN+ if they buy a “Hulu Live” membership (a TV channel that allows them to watch live TV channels on the web) discount.
This preferential policy is very effective. In the most recent quarter, the growth rate of “Disney+” members in the United States reached 11%, which is much higher than the growth rate of about 2% to 3% in the past four quarters.
Data shows that at the end of the fourth natural quarter of last year, the “Disney+” platform had 130 million paid members worldwide, of which 42.9 million were located in North America. According to the company’s public goals, by 2024, the global number of paid members of “Disney+” is planned to reach 230 million to 260 million.