In an effort to cut costs and maximize profits for the company to appease the shareholders, a lot of streaming services have added an ad-supported tier to their plans that hadn’t existed before. Only Hulu was brave enough to charge people to watch ads on their platform like their ancestor, cable TV, did before it.
Now, the House of Mouse has come out and said that it’s actually working. From March to September 2023, Disney stated that 50 percent of new subscribers were actively choosing their $7.99/month plan with the ads than the more expensive ones that exclude them.
Rita Ferro, Disney’s president of global advertising, told The Hollywood Reporter that 40% of Disney+ subs chose to view ads earlier in the year. This was after they added the tier back in December 2022 and advertised it heavily.
They also raised prices for their ad-free tiers like everyone else. They kept their ad-supported tier at its low price. The CEO made it clear this was done for a reason.
We’re actually keeping the advertiser-supported product flat in terms of prices. We’re obviously trying with our pricing strategy to migrate more subs to the advertiser-supported tier.”
Bob Iger, CEO of Disney, Earnings call in August
Not only is Disney seeing this work out for them lucratively. Netflix is also seeing this move pay dividends for them as well. Disney has seen it work so well that they are moving to roll out the ad-supported tier in Canada, parts of the EU, and the UK.
Now, in this capitalist hellscape, this looks like great news. But, the fact of the matter is, when people have less to spend and they want a reprieve from everything going on, they’ll pay whatever. Cash strapped Marvel and Star Wars fans might be willing to stomach ads because it’s all they can afford. Parents will gladly let their kids sit through ads if it keeps Mickey Mouse on the screen.
This isn’t people actively choosing ads as much as it is an illusion of choice made to keep the wealthy rich at the expensive of someone who just wants to watch an episode of Hannah Montana.
Source: The Verge