Disney+ Launches New Ad Yier — Why It Could Be a $3 Billion Opportunity
$Disney (DIS.US)$'s ad tier officially launched Thursday as the media giant looks to curb accelerating streaming losses.
We expect Disney to generate anywhere from about $500 million to even up to $1 billion dollars in ad-supported revenue on the Disney+ product in their first year of operation.
Disney has added about 40 million to 45 million subscribers year after year on their Disney+ product— that's just some staggering growth, and it's expected to grow even further with this new ad supported tier.
—— Geetha Rangathan, analyst at Bloomberg Intelligence
Rangathan expect ad-supported revenue rise by up to $3 billion over the next 3 years, reiterating her confidence in the company amid its early streaming success.
The new offering — which comes 1 month after $Netflix (NFLX.US)$'s much-anticipated ad-supported debut — costs $7.99 per month, $3 less than the ad-free version of Disney+ which now costs $10.99 per month.
The ad load will be conservative at first, roughly 4 minutes of ads per hour or less. That's about half of Hulu's 8 minute-per-hour ad load and even less compared to linear television's 15 minute-per-hour standard.
According to a new study by Kantar Research, about 25% current Disney+ subscribers will trade down to the ad-supported version — translating to roughly 46 million of the streamer's total 164 million user base.
Industry experts suggest offering lower-cost, ad-supported options are still an important hedge against churn — something all streamers want to avoid amid increased competition.
Mooers, are you positive about Disney's new move? How will this affect Disney's stock price?
Source: Yahoo Finance
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