Disney’s new motto: getting you and your kids to watch ads … priceless.
Disney+ will serve up some expensive pricing magic … again. The economics of streaming services are increasingly driven by the ad-supported tiers, which have higher ARPU (Average Revenue Per User) because … advertisers will pay a lot to hook us, and even more to hook our children.
This means The Walt Disney Company, Netflix and the rest want to aggressively push a higher mix of subscribers into ad-supported, where their eyeballs are worth more than their monthly subscription fee.
So how are they going to do it? By increasing the “regular” ad-free price until you can’t take it anymore and “downgrade” to watching ads instead.
Quote from Bob Iger on the earnings call:
“I think one of the things that we not only have discovered, but that we believe we have to do, is that we’ve got to widen the delta between the ads free — the ad-free service and ad — the non-ad-supported service, because we clearly would like to drive more subs to the ad-supported service, which we did in the quarter, by the way, the obvious reason because the ARPU potential of the ad service Disney+.”
(link in comments, it’s worth reading the whole piece!)
I have written extensively when Netflix introduced ad-supported about how the economics work (link in the comments). It’s unusual to have Mr. Iger come out and basically repeat my analysis, but I’ll take it.
PS: I’m sure glad when my daughter was that age, I invested in buying most of the classic Disney DVD’s. Subscriptions are gonna get you, ads, cash, or combo.