Disney+ weighs free tier to expand reach and boost ad sales

The Walt Disney Co. is considering introducing a free version of Disney+ as it looks to reach price-conscious viewers, increase advertising inventory and attract more paying subscribers.

CEO Josh D’Amaro confirmed the discussions Wednesday during Disney’s fiscal third-quarter earnings call. He said the company has no specific launch plans to announce but believes a free tier could address several of Disney’s streaming priorities.

A free offering could introduce Disney+ to consumers unwilling to pay for another streaming subscription, D’Amaro said. Disney could then use the service to promote its paid plans and move some viewers further into the Disney+ ecosystem.

The model could also support Disney’s growing streaming advertising business. D’Amaro said Disney+ has sold much of its available advertising inventory, meaning a free service could create additional space for commercials and accelerate ad revenue growth.

“Unlike a lot of our AVOD competitors, we’re fairly well sold, meaning more inventory would actually help us accelerate our ad revenue growth,” D’Amaro told analysts.

The proposal would represent a shift for Disney+, which launched in 2019 as a subscription service built around Disney, Pixar, Marvel, Star Wars and National Geographic programming. Disney has since added an ad-supported paid plan and integrated more Hulu and ESPN content into the platform.

Disney executives had been discussing the possibility of making some Disney+ programming available without a subscription before D’Amaro’s public comments. The internal talks were part of a broader effort to compete for viewers who increasingly spend time with free platforms such as YouTube, Tubi and The Roku Channel.

A free Disney+ tier could resemble earlier models used by Peacock and Hulu, which offered limited programming without a paid subscription. It would differ from free ad-supported streaming television services, which generally rely entirely on commercials and tend to carry fewer expensive original productions.

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Disney is also adding short-form videos and other features to Disney+ as it works to make the app a broader destination for entertainment and fan activity. The company announced Wednesday that selected TikTok creator videos will be distributed through Verts, Disney+’s vertical-video feed.