Disney CEO Bob Iger accidentally revealed a key piece of commercially-sensitive data during the company’s most recent earnings call: how many Disney+ subscribers are on ad-supported tier.
He quickly realized his mistake, commenting shortly afterwards that “I don’t know if I was supposed to disclose those AVOD [Ad-based Video On Demand] numbers” …
Deadline reports.
Fielding a question from a Wall Street analyst about the growth outlook and pricing strategy of Disney+, Iger divulged how many Disney+ subscribers take the ad-supported tier in the U.S. (37%) and globally (30%). The disclosure was unusual in the streaming sector. Netflix, for instance, has never broken out a similar percentage […]
When the Q&A with analysts moved to the next question and CFO Hugh Johnston was giving his answer, Iger’s voice suddenly could be heard on the call. “I don’t know if I was supposed to disclose those AVOD numbers,” he said, before Johnston continued speaking.
Iger was also remarkably candid about the company’s pricing strategy more generally. We noted last year that the cost of a Disney+ subscription has risen dramatically since the service was first launched.
In December of last year, Disney increased the price of the standard Disney+ tier from $7.99 to $11.99, while simultaneously introducing a replacement $7.99 tier branded as Disney+ Basic, which displays ads.
Top comment by Fats
US over the air TV used to be ‘free’, supported by ads to fund programming. When cable was introduced it was pitched as being ‘ad free’ since it was supported by a monthly fee. Cable began to introduce ads to a point that it resembled over the air, yet customers were still paying (increasing) fees.
Modern streaming is following the same formula as cable … starting as ad free with a subscription fee … but eventually ending up with the customer paying both a monthly fee, and being inundated with ads.
So essentially the customer is now paying to be marketed to.
Things got worse from there, with rises to first $13.99 and then $15.99 per month as of last month, meaning the price has doubled since launch.
Iger revealed that the steep raises for the standard tier were in part deliberately intended to push people to downgrade to ad-supported subscriptions, because those have become more profitable for the entertainment giant.
“It’s not just about raising pricing,” he said. “It’s about moving consumers to the advertiser-supported side of the streaming platform […] The pricing that we recently put into place, which is increased pricing, was actually designed to move more people in the AVOD direction because we know that the ARPU [average revenue per user] – and the interest from advertisers in streaming – has grown.”
Apple TV+ doesn’t (yet?) offer an ad-supported tier, and has seen price rises of similar proportions, now standing at $9.99 per month.
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