In what will be something of the end of an era for the streamer, the Walt Disney Company has announced that they will expand away from their SVOD-only subscription offer to allow an AVOD service later this year. Brandon Blake, the entertainment lawyer with Blake & Wang P.A, looks at what we know and the implications of this new development.
No Date Announced
While we know that the domestic rollout will begin in 2022, expanding to their international subscribers in 2023, they have given no firm date for the local rollout, and pricing remains under wraps too. Their announcement speech was packed with logical, but very transparent, reasoning for the new tier. They’re simply hunting audience reach and greater consumer numbers.
Disney is currently operating under a rather lofty subscription goal of 230-260M new subscribers by the end of their 2024 fiscal year. Currently, they have a little over half that- 129M subscribers as of the end of 2021. They also saw slowed growth after the introduction of a price hike early last year. While streamers inevitably do after a price rise, it definitely puts a damper on their growth.
No doubt they are also hoping for a boost to their bottom line through advertisers eager to associate themselves with the Giant-in-Charge of shaping American childhoods. There’s little doubt that the huge, genre-shaping brands under the Disney banner will prove alluring for advertisers globally.
Competition with Hulu
Adding an ad-supported tier to the Disney+ service will certainly make them more competitive on the overall streaming market, too. What is unusual, however, is that it also brings the streamer into direct competition with the lower tier of Hulu, also a Disney property. Hulu has long been seen as a pioneer of ad-supported streaming, in fact.
Advertisers have been clamoring for their share of the Disney market since its launch, but the move itself is still rather surprising overall, especially as there has been little indication of the development coming.
It is near-inevitable the streaming giant will face some push-back from concerned parents and has already moved to head this off at the pass with assurances that advertising will be ‘contextually relevant to viewers’. Industry predictions are that it will leverage a slice of the pie to showcase its own theme parks, experiences, and attractions directly to children, too. While they’re hardly the first streamer to move into AVOD viewing, it’s still a thorny problem that doesn’t exist for many of the other, more generalized streamers, and it will be interesting to see how they handle any incoming criticism of the matter.
Of course, on the flip side of the matter, they could be hoping that expanding the range of advertisers investing in the channel will also help them shed their image as a child-centric streamer, something often credited with holding back their overall growth. How this will evolve, and how precisely it will be defined, of course, remains to be seen.
No doubt many will be eagerly awaiting the new product’s launch later this year. We will be keeping an interested eye on the new tier as further announcements come.