As streaming competition heats up, Disney is testing Free Disney Plus Tier.
Disney is mulling on a big shakeup in its streaming service as it contemplates a new free, ad-supported Disney Plus offering.
The move would mark a major change for the company that has been pitching Disney Plus as a top-tier subscription service that offers viewers exclusive movies, TV shows and original content.
In Disney’s last earnings update, CEO Josh D’Amaro said they’re looking at a free streaming product that will help them reach more viewers, particularly those less price-sensitive when it comes to subscriptions.
Disney hasn’t stated a date or final plan, but the company suggests a free tier could help grow its audience and give it an edge in the growing and crowded streaming market.
The Free Streaming Model is one area Disney is considering.
D’Amaro also responded to the question about the possibility of providing a free, ad-supported Disney Plus experience saying that the company is “exploring a free product for consumers.”
He said a free tier may attract more Disney customers who may not have subscribed due to costs.
But the CEO noted that there are, at this time, no firm plans or announcements.
The possible migration comes at a time when the streaming sector is testing alternative pricing strategies to appeal to and keep viewers.
Free ad-supported streaming is an alluring strategy as subscription growth has slowed in the whole industry.
Competition from free platforms such as YouTube.
One of the most important issues that traditional streaming services are facing is the competition of free digital services.
Platforms such as YouTube have grown past mere short videos and creator content, and are becoming a television alternative in particular.
It has added new capabilities aimed at making the platform more like a traditional television channel, such as continuously rolling content channels, as well as new features to help creators structure videos into seasons.
For many people, free services have become sufficiently entertaining that the allure of paying for several streaming services has diminished.
In turn, companies such as Disney, Netflix and Warner Bros. Discovery have had to look at what they are doing to deliver content.
Ad-supported streaming is gaining traction.Ad-supported streaming is on the rise.
A complimentary Disney Plus tier would most probably be funded on the backs of advertising dollars.
The advertising-supported lower-cost option has already been launched by many streaming services in order to appeal to budget-conscious consumers.
The approach enables firms to target viewers who otherwise wouldn’t be paying monthly subscription charges but can still return money from advertisers.
Disney already has a version of Disney Plus with ads in some markets, and a totally free version would be a next step.
While it would be wise to encourage users to subscribe at any price, Disney could consider free as another means to get more users into its ecosystem.
Disney is looking to make Disney Plus a bigger ecosystem.
In addition to driving up the number of subscribers, Disney is also looking to build Disney Plus as a larger piece of the Disney business.
The company’s intent is to make Disney Plus the “digital centerpiece” of Disney’s future, said D’Amaro.
The company will make streaming a part of its other operations, such as:
Games
Merchandise
Interactive experiences
Exclusive subscriber benefits
Personalized content recommendations
The aim is to make Disney Plus more than just a location to watch movies and shows.
Rather, Disney would like the platform to be a hub where the company’s entertainment operations all converge with the fan.
TikTok is partnering with Disney for fan videos.
Disney has also said it will partner with TikTok as part of its engagement boost.
The partnership will incorporate fan-created content related to Disney into the Disney Plus app.
This is something that is increasingly happening within entertainment companies: the mix of professional studio-made content and UGC.
Younger audiences are increasingly consuming entertainment via platforms such as TikTok, where fans are building up fan communities, making clips, discussions, and creative content related to popular franchises.
With the introduction of fan-created content on Disney Plus, the company says it aims to give users a more “interactive” experience.
The dilemma of paying for premium vs. free content.
There are obviously trade-offs to a free Disney Plus tier, but it could also lure millions of new viewers.
This is something that Disney will need to be careful about as they have to find a balance between accessibility and the value of their paid subscriptions.
Some present subscribers could downgrade if too much content becomes available and is free.
The company will have to decide on which type of content is best kept for paying customers and which content can be used for free ads.
A key element in the successful implementation of this will be to ensure a distinction between free and paid experiences.
The future of streaming could be flexible.
The potential of free tier is an example of a bigger trend that is taking place throughout entertainment.
The typical “streaming subscription” approach — one subscription for every service — is becoming a challenge due to the “subscription fatigue” of consumers.
Going forward, various streaming platforms might provide a number of choices:
Free ad-supported access
Premium subscriptions
Exclusive benefits
Interactive experiences
Businesses will have to be flexible and still produce valuable content.
A free Disney Plus service could be a way to gain new users and bolster Disney’s broader digital plans.
