Disney to 'learn' from Netflix’s mistakes with launch of ad tier, buyers say

Disney+ is likely to have learned from Netflix’s mistakes when it brings its ad-tier proposition to market, according to media buyers.

The streaming platform has already launched an ad tier in the US and is set to launch it in Europe on 1 November, charging customers £4.99 ($6.36) a month. 

Talking to Campaign, one media buyer, who wished to remain anonymous, said the company had been “smarter” than Netflix by raising the price of its current offering, which goes up from £7.99 to £10.99 ($10 -$14) per month, a change that will coincide with the ad-tier launch.

“The fact that they are putting the price up for the people that are committed to it already, it [incentivises] them to downgrade to the standard with ads,” they said.

Disney is relabelling the current Disney+ offering as Disney+ Premium, allowing four people to watch shows concurrently. Another tier will continue to charge the existing £7.99 price, and will be known as Disney Standard. However, it will reduce the number of people being able to stream simultaneously to two.

When Netflix launched its ad tier in Europe last year, it charged £4.99 but also kept its Basic plan at £6.99 ($8.91) a month. The media buyer added that “not a huge volume of people” joined the ad tier at the time, because most people just stayed with Basic.

Media buyers at the time called Netflix's pricing “extraordinarily bullish” and “arrogant”. To place an ad with them, the streamer charged £50 ($64) per-thousand viewers, asked agencies to commit to spending at least £5 million ($6.4 million) advertising on the platform and allowed advertisers to target only by genre and country.

Netflix has found success since though, doubling its monthly ad-tier users from five million in May 2023 to 10 million in August 2023. In its Q2 2023 letter to shareholders, Greg Peters, co-chief executive, said the company had "lots of hard work ahead", but that over time the company was confident it could develop the ad-tier into a "multibillion-dollar incremental revenue stream."

Regarding Disney, buyers are expecting a limited soft release, heavy restrictions on the brands they will take on board and limited targeting, much like Netflix.

However, another media buyer added: “Disney are very aware of how Netflix came in too strong, too bullish and they’ve taken a lot of learnings from that.”

They added that the company realised they had to work closely with agencies and not just “demand a price”.

Disney's offering of a cheaper, ad-funded option also presents a distinct challenge to Netflix, as buyers could see it as key to unlocking families and children.

“There will be a lot of advertisers out there that are looking to reach families with young kids viewing together and Disney probably offers that more so than Netflix,” another media buyer said.

According to Ofcom’s most recent Media Nations report, 13% of subscribers said they were signed up to Netflix’s ad plan and this percentage rose to 20% among 35- to- 44-year-olds. One media buyer said that this group was more likely to be buying for a family household and looking to save on purchasing multiple subscriptions.

Disney+ looks set to benefit from Netflix being the first major streamer to embrace AVOD last year.

However, wariness remains among buyers at media agencies. They stressed that the streaming giant needs to have confirmed its offering by September, when clients' media plans for Q4 already laid out.

(This article first appeared on CampaignLive.co.uk)