Disney+, Netflix and Warner are finalizing plans with ads… how this will impact digital advertising

Disney+, Netflix and Warner are finalizing plans with ads… how this will impact digital advertising

Disney Netflix and Warner are finalizing plans with ads how

Disney has already set a price and date for the launch of the Disney+ version of its streaming platform with ads. The new offering is called Disney+ Basic and will be available on December 8th in the US for $7.99 per month, the same price it is now for the ad-free version of Disney+, which increases its price by 37% to 10% on the same day $.99/month, and it’s called Disney+ Premium.

According to the company, the version with ads will contain the same content available in its ad-free offering and will broadcast four minutes of advertising per hour of content. It will start with 15- and 30-second ads, but will expand to a “full set of ad products” over time, said Rita Ferro, head of Disney Advertising Sales. The company clarified that Disney+ does not accept political and alcoholic ads with ads.

According to entertainment business publication Variety, the company expects that over time, the majority of Disney+ customers will opt for the cheapest plan with advertising, similar to Hulu, another Disney service, which accounts for two-thirds of its subscriber base on advertising has -supported plans. Disney’s strategy seems on target, this publication adds ease Disney+ subscribers’ anger from the price increase on the plan without advertising.

Disney+ joins Netflix’s plans, which announced three weeks ago that it would launch its cheapest plan with ads in early 2023. A proposal Warner is also testing, which said last week it will merge HBO Max and Discovery+ into a single platform by 2023 and plans to offer a cheaper, even free, subscription in exchange for advertising.

All three news stories come at a time when Wall Street is taking a much closer look at the streaming industry’s costs, growth prospects, and potential profits. And everything indicates that the advertising will allow the three companies to offer more options and prices, which is particularly relevant in difficult economic times like the current one with skyrocketing inflation and a looming recession. Additionally, advertising revenue can help defray high content spend.

Elena Neira, professor at UOC, clarifies in this regard that in the United States the subscription market with advertising is quite mature, since there are already several services that have adopted this model, such as Hulu, which offers versions with and without advertising . And remember that the version with advertising was always present in Warner’s plans. “When they re-launched HBO Max, they were already thinking about launching another cheaper version with ads They were the most expensive platform on the market ($14.95); Now we don’t know how it will look like when the new platform merged with Discovery is launched.”

In any case, for Neira, the reasons that have led Disney+ and Netflix to launch versions with advertising are very different, although the goal is the same. “For Netflix, it’s because of the weakness of its business model, which relies heavily on subscriptions. Inflationary pressures and increasing competition are causing him a lot of damage and has prompted him to look for a new way that will allow him not only to attract and keep customers, but also to generate new revenue, namely advertising.”

And this new bet too would reassure investors As Neira points out, they are very concerned about the loss of customers the platform has had over the past two quarters, and they see that the launch of the version with advertising “could strengthen the business and make it less volatile.”

In the case of Disney, continues the UOC professor, launching a version with advertising is a declaration of intent: “It wants a cheap platform with advertising to compete with Netflix in times of economic crisis and for people who don’t want to see it pay much more for advertising. It’s the perfect excuse to increase the prices of all the packs they have, and above all to make Disney + more expensive, which today, as suggested, is an excessively cheap service.

The great unknown was knowing how they would play with the prizes [a partir de 10 de octubre también subirán los de Hulu con y sin anuncios, y los paquetes que incluyen Hulu, Disney+ y ESPN+]but this launch makes a lot of sense because, as they said, they are aware that they will not grow at the planned pace and need alternative revenue to pay for subscriptions,” he continues.

For Neira, these offers with advertising will remain in perpetuity even if economic conditions improve. Additionally, he warns that these streaming platforms, just as they fundamentally transformed the television business when they first launched, will have a significant impact on the digital advertising business. “When these big companies capitalize on ads, what the digital advertising market has been missing will really mature, that is the support of the major platforms“.

The UOC professor believes we are entering a “very interesting” period with these launches development of the digital advertising market, “It’s been very successful and doing very well on certain platforms, but there are still advertisers who are looking at it with a lot of reluctance, and the fact that new players like these streaming platforms are getting into the business can help encourage them.” eliminate.”

This expert believes that Netflix, Disney+ and the future Warner platform with advertising will enable development Ads based on affinity, not reach, “not only with conventional advertising like the spots of life, but with different formats”. Netflix, and those platforms in general, he points out, have an encyclopedic knowledge of their users’ preferences. “And that’s also the basis of YouTube’s advertising success. So if well planned and monetized and without saturation, these platforms with advertising open a very successful door for us.”

As to whether any of these three platforms are better positioned to attract advertisers, Neira believes Disney+ and Warner already have their trust because they’re broadcaster companies. “Advertisers already know them and don’t have to prove anything to anyone” He is very optimistic about Netflix. “Although it is not yet known how countries will implement this cheaper version of the platform, I stand by what Ted Sarandos said [co CEO y responsable de contenidos de Netflix]when they announced the ad-supported version: “We wanted to make the best television possible and we will want to do the best possible publicity’. And I think that with all their technological capacity and with Microsoft behind them, they can be successful.”

Another positive point in favor of Netflix, according to the UOC professor, is that this company is taking action in the opposite way to Disney, “because while Disney is launching the version with ads to make the version without ads more expensive, Netflix is ​​doing it offer a cheaper service because the big problem with this company is that it is a mature platform that is much more expensive.”