Disney+ streaming service will offer lower-cost version with ads

[LOS ANGELES] Walt Disney, looking to accelerate growth of its flagship streaming service, will offer a lower-priced version of Disney+ with advertising later this year.

The new service will begin in the US in late 2022 and expand internationally next year, Disney said on Friday (Mar 4) in a statement. The company plans to release details about price and timing at a later date.

The move follows other media companies offering various plan options for their online video services. Comcast's Peacock and AT&T's HBO Max both come with ad-supported and ad-free versions.

Disney's own Hulu streaming service has turned commercials into a US$1 billion revenue stream. The one exception now among the large streaming companies is Netflix, which offers three pricing tiers but none that include advertising.

"Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone - consumers, advertisers and our storytellers," said Kareem Daniel, chairman of Disney Media and Entertainment Distribution, in the statement.

Disney+, which features classic animated films as well as original series such as the Star Wars spinoff "The Mandalorian," launched in 2019 for US$7 a month. After a price increase last year it now costs about US$8 a month or US$80 a year.

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The company also offers a bundle that includes ESPN+ and the ad-supported version of Hulu for about US$14 a month.

The company reported 129.8 million Disney+ subscribers in the fiscal first quarter. Disney chief executive officer Bob Chapek has set an ambitious goal of at least 230 million subscribers worldwide by 2024.

Disney said Friday that the ad-supported version of Disney+ is seen "as a building block" for that target. BLOOMBERG