Disney+ Overtakes Rivals, Adds New Ad-Supported Service

As it surpasses Netflix in the battle for subscribers, Disney will introduce a brand-new ad-supported streaming service in the US in December.

As of 2 July, the company reported having 221.1 million subscribers across its streaming channels. In contrast, its biggest rival, Netflix, has been struggling after losing customers.

However, Disney warned that losing cricket streaming rights in India will slow the projected subscriber growth.

The company claimed that demand for its Disney+ services was still robust.

Disney and other streaming platforms like Netflix and Amazon’s Prime Video benefited from pandemic lockdowns. But, unlike its biggest competitors, it doesn’t seem to be losing new customers despite the relaxation of Covid-19 restrictions.

In the third quarter, the firm added 14.4 million Disney+ customers, significantly more than experts had predicted.

Moreover, it will introduce a new advertising-supported service later this year, which will continue to be priced at the $7.99 monthly subscription level to attract more customers outside the US.

The monthly fee for the ad-free subscription will increase to $10.99. However, the entertainment giant’s executives said they didn’t expect the price rise to put off subscribers in the long term.

According to Disney, there’s also a lot of interest from businesses looking to advertise on the new service.

In a conference call to announce the company’s financial achievements, chief executive Bob Chapek said: “We are in a position of strength with record upfront advertising commitment.”

The move is reportedly motivated by the high costs behind its subscriber gains, as its streaming business has lost 1.1 billion in the quarter. Also, losses are expected to peak this year, the executives added.

PP Foresight analyst Paolo Pescatore, who said that Disney had more space for expansion than Netflix, stated the plan was a “pivotal moment in the streaming wars.”

In the past quarter, Netflix lost roughly one million accounts, bringing its total number of subscribers to 220.67 million. The figures are slightly below Disney, which has more than 221 million customers.

Disney tracks each streaming platform subscription independently, so those who subscribe to multiple services are tracked twice.

“[The results] firmly underline my belief that Disney is at a different phase of growth to Netflix. There are still millions of users to acquire as it continues to expand into new markets and rolls out new blockbuster shows,” Mr. Pescatore stated.