Disney CEO Says Disney Will Maintain Ad-Free Streaming

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Disney CEO Says Disney Will Maintain Ad-Free Streaming

By Movieguide® Staff

Disney CEO Bob Chapek announced that Disney+ will maintain its current format, despite other streaming models breaking out ad-supported tiers to lower the overall costs.

Hollywood Reporter reported:

The Walt Disney boss, while touting the recent launch of Disney+ globally, also said the studio did not envision an ad-supported version of its flagship streaming platform. “We have no such plans to do that. We’re happy with the model we got,” he insisted.

Disney+ is a strategic part of Walt Disney Co.’s desire to move beyond the normal conventions of movie and TV broadcasts.

Movieguide® previously reported:

Consumers in lockdown turned to streaming services amid lockdowns and theater closures. Disney+ attracted viewers with beloved brands like Disney Animation, Marvel Studios, Pixar Studios, and Star Wars, which became the “absolute forefront of the company,” according to Cole.

“Disney+ has been the one shining star in the Disney empire in 2020,” Trip Miller, a Disney investor and managing partner at hedge fund Gullane Capital Partners, told CNN Business. “The advent of the Disney+ platform could not have come at a better time.”

Disney as a whole works to ensure the success of its flagship streaming platform with exclusive content and a focus on building the Disney+ brand.

Movieguide® previously reported:

“It’s become the central part of Disney,” Jeffrey Cole, director of USC Annenberg Center for the Digital Future, told CNN Business. “Most of us anticipated it would take two or three years to get to these subscription levels, to be this central, to be an important source of revenue, to become a part of the culture — and it happened in months because of the pandemic.”

Analysts further emphasized the importance of streaming in today’s rapidly changing media environment.

“The streaming revolution is gathering pace and cannot be ignored. Companies can no longer continue to support a slew of channels and cannibalize revenue streams. The future is all about streaming and this latest move sets a benchmark for others to follow suit,” PP Foresight analyst Paolo Pescatore said.

Despite the analysts’ optimism, multiple streaming platforms are reporting under expectations.

According to The Hollywood Reporter:

“We had those 10 years where we were growing smooth as silk, and then it just got a little wobbly,” said Netflix co-CEO Reed Hastings in an April 20 video for the company’s first-quarter earnings after the company missed its own modest subscriber estimates.

And it wasn’t just Netflix. Disney+ also missed Wall Street expectations, delivering 103.6 million subscribers at the end of the last quarter, well below the 110 million that had been anticipated. Given the explosive growth of Disney+, and the reliable, steady growth of Netflix, the misses drew consternation from analysts and executives, who posited three pandemic-driven theories for the slowdown: the subscriber pull-forward, the content squeeze, and the reopening.

To combat the slowing growth, other streaming services are eyeing ad-supported options to help fuel growth.

THR reports:

Multiple streaming services are also trying to chart a path to growth with strategies that may deliver raw subscriber numbers in the near term, but risk delivering lower average revenue per user (ARPU). Paramount+ and HBO Max are betting that less expensive ad-supported tiers can bring in subscribers that may be feeling the pinch of having too many premium video options. HBO Max With Ads launched June 4 at $9.99 per month, a $5 discount. Paramount+, meanwhile, lowered the price of its ad-backed tier by $1 to $4.99 per month.

“Ad-supported streaming is now foundational,” says Andre Swanston, CEO of the TransUnion-owned streaming data and measurement firm Tru Optik. “I think it was almost a business imperative. My biggest surprise is that Netflix still hasn’t pivoted to do the same.”

“It goes to the heart of the value exchange question,” adds Eric John, vp of the Interactive Advertising Bureau’s Media Center. “If you talk to the folks at Hulu, they would tell you that growth has always continued to be in the ad-supported, less expensive tier.”

For Disney, though, content is king, even as they maneuver the new streaming landscape.

Marvel Chief Executive Officer Kevin Feige said that when it comes to“success in the streaming world, I’m still learning and figuring out.”

Deadline elaborates:

“It’s a whole new world,” he said. “As far as I know there aren’t really any Nielsen ratings (for streaming). I haven’t been given any Nielsen ratings for a streaming series.”

“All the different streaming services have access to their own information, but don’t share it so easily to the public or across services,” he continued.

“We knew what success meant at the box office — that was very clear. There were numbers to compare it to,” he added.

“One sign is social discussion of reviews, that’s been helpful,” he said.

Feige brings up an interesting point, and it’s part of the evolution of streaming: What do these streaming numbers actually mean aside from raw numbers? When it comes to measuring streaming viewership, it’s the wild west with no standard streaming data metric determining how well a particular series or special actually did in comparison to the competition. Not to mention, in regards to a global reach, Disney+ and HBO Max aren’t as wide as, say, Netflix.

Meanwhile, though, Disney will explore options other than ad-supported streaming to grow their audience, including international reach and different premiere days.