NEW YORK—A cross section of executives from the advertising, data analytics and streaming industries responded to the launch of Disney+’s new ad tier by suggesting it was a positive development for the streaming industry that would “accelerate” the ongoing shift of ad dollars from traditional TV to streaming.
“As Disney+ introduces a massive library of premium advertising inventory aligned with some of the most beloved and recognizable franchises in history from Marvel to Star Wars the movement of ad dollars out of traditional TV and into streaming will only accelerate,” argued Dallas Lawrence, senior vice president of Samba TV in an email. “Disney knows the consumer and the advertising industry better than almost anyone and now has the potential to capture previously untapped audiences as their ad-supported tier is rolled out, especially younger, more affluent viewers. The exciting value proposition from Disney’s upcoming streaming ad model lies in the possibility it offers to bring in and monetize net new or lapsed subscribers. 9 out of 10 adults who do not currently have a Disney+ subscription watch other ad-supported streaming content today, indicating these audiences have no aversion to watching ads in exchange for free or reduced-price content and are prime candidates to turn to Disney’s new ad-supported tier.”
“While Netflix has definitely garnered more industry attention with its launch, that doesn’t mean marketers aren’t just as excited about Disney’s ad-supported tier,” explained Matt Spiegel, executive vice president of the Media & Entertainment Vertical, TransUnion. “It’s difficult to compare the two since Disney+ is more of an add-on strategy and the market expects more out of Netflix following its long stance of remaining ad free. Looking at the ad market from a macro perspective, this is business as usual for Disney that will garner its own attention without competing against Hulu and its other media brands. Disney’s add-on strategy shouldn’t underscore the importance of the launch, but rather highlight Disney’s commitment to reinventing the TV business model and bringing together a full portfolio of their solutions, into the ad-supported streaming ecosystem.”
The launch comes at a time when consumer decisions regarding streaming services are impacted by economics.
Even though online streaming services are betting big on ad-supported accounts, the success of these services comes down to what the consumer prioritizes for spending, especially as layoffs occur, Laura Connell, consumer trends manager, GWI noted that in an email. GWI found 26% of unemployed people don’t use any streaming services; meanwhile, those with the highest incomes were 1.6x more likely to have over 5+ subscriptions.
In terms of those spending priorities, GWI data shows that since since 2011, the number of US consumers who paid for a movie/TV streaming service has grown a whopping 356% (from 9% to 40%) and that in Q4 2021, 66% of US consumers reported watching subscription services within the last month and 26% have actively used Disney+.
In addition, Netflix remained on top in the U.S. this time last year with 58% of consumers in Q4 2021 reporting using the service, putting it significantly ahead of the competition, according to their research.
“Price hikes are hitting many of the major streaming platforms heading in the holiday season, so affordable ad-supported tiers like the new Disney+ Basic plan will be attractive to many consumers,” explained Kevin Krim, president and CEO, EDO, a data, measurement and analytics company. “D+ is the fastest growing streaming platform right now, and the Basic plan offers yet another step toward its profitability.”
Several executives also stressed, however, that Disney has more work to do if it wants to thrive in the ad-supported streaming world.
“Disney has differentiated itself by being known as a family brand that has content that is suitable for all audiences,” explained Field Garthwaite, CEO and co-founder, IRIS.TV, a data platform built for video. “With their new ad-supported tier, Disney+ and Hulu will need to introduce capabilities that address ad relevance and brand suitability in order to maintain the same expectations audiences, brands and advertisers expect. Incorporating video-level content data into their advertising solution will help Disney increase the value of their new ad supported options, while minimizing risk of bad viewing experiences and brand sentiment by eliminating any ad placements in unsuitable environments."
In terms of Disney’s cross-platform empire and the streaming ad experience, EDO's Krim noted that “Disney’s cross-platform empire blurs the lines between streaming and linear, giving them a lot of ways to take advantage of a D+ hit like Andor, which aired two full episodes across Disney-owned ABC, Freeform, FX, and Hulu recently. As the platform diversifies with popular franchises such as Star Wars, Marvel, Pixar and Dancing with the Stars, it will continue attracting an even broader audience. To get those subscribers to stick around, though, Disney’s ad experience has to be seamless for both consumers and advertisers. Most TV viewers are actually OK being served ads in exchange for lower subscription costs, but they still demand entertaining, engaging premium content and quality ads delivered with great technology.”
“Luckily, Disney’s existing world-class advertising team is armed with innovative measurement solutions – like consumer engagement metrics – to ensure they are prepared to help their advertisers know what works across the Disney streaming environment,” Krim added. “Creating custom, targeted ad experiences is already part of Disney’s forte, and something that will undoubtedly translate to their streaming offerings.”
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George Winslow is the senior content producer for TV Tech. He has written about the television, media and technology industries for nearly 30 years for such publications as Broadcasting & Cable, Multichannel News and TV Tech. Over the years, he has edited a number of magazines, including Multichannel News International and World Screen, and moderated panels at such major industry events as NAB and MIP TV. He has published two books and dozens of encyclopedia articles on such subjects as the media, New York City history and economics.
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