Will Bob Iger’s Latest Cash Grab Save Disney?

in Disney, Entertainment, Movies & TV

Bob Iger Disney World

Disney’s ad tier version of Disney Plus officially launched earlier this week as the media giant looks to slow its accelerating streaming losses.

Disney+ Logo
Credit: Disney+

Related: Disney+ Is Losing Millions, But Disney Parks Could Be a Problem For Iger

As The Walt Disney Company looks to leverage its ad tier version of Disney Plus, recently reappointed CEO Bob Iger hopes the new launch can assist in softening unfavorable investor sentiment. As of Friday, shares of Disney were down more than 40% since the start of 2022.

Disney’s direct-to-consumer unit, which includes Disney+, Hulu, and ESPN+, couldn’t have been any worse of a disaster when it reported its earnings results last quarter. Losses within the unit totaled around $4 billion.

When Disney CEO Bob Iger spoke with employees at a company-wide town hall a few weeks ago, he highlighted a plan for a strategic shift toward profits is currently in motion. At that same town hall, he also revealed there were currently no plans to reverse the hiring freeze implemented by Bob Chapek to cut costs.

Disney officials presenting Disney plus
Credit: Disney

Related: Disney+ Removes Hundreds of Movies, Plans Major Change

According to one analyst, however, Disney Plus’s ad-supported version may help Disney rake in billions of dollars. Geetha Rangathan, an analyst at Bloomberg Intelligence, recently said that “we expect Disney to generate anywhere from about $500 million to even up to 1 billion dollars in ad-supported revenue on the Disney+ product in their first year of operation.”

Rangathan said in that same interview that she believes that Disney Plus revenues could rise by up to $3 billion over the next three years, confirming her confidence in the entertainment giant based on Disney’s early streaming success.

The ad load pace on Disney Plus will be slow to roll out at first. Disney plans to have roughly four minutes of ads per hour or less. That’s about half of Hulu’s eight-minute-per-hour ad load and even less than traditional television’s 15-minute-per-hour standard model.

The Walt Disney Company also announced that there would be no commercials featuring alcohol or competitor content and no political ads for the time being.

Disney+
Credit: Disney

Related: Disney’s Streaming Success Isn’t Reliant on Disney+

Based on a recent study by Kantar Research, about one out of every four current Disney Plus subscribers will trade down to the ad-supported version. This would translate to roughly 46 million of Disney’s total 164 million user base.

Rangathan had predicted that anywhere from 20% to 30% of the U.S. subscriber base could trade down to the ad-supported version, although that number could edge higher based on Hulu’s recent success.

Netflix, which launched its ad-supporter tier version of its streaming product, has seen immediate success, and the stock price has reflected that momentum. It will undoubtedly be interesting to see if Disney can generate the same buzz as Netflix.

The long-term success of the ad-supported tier of Disney Plus couldn’t be more critical as Bob Iger returns to the House of Mouse.

Which type of Disney Plus version will you be subscribing to? Let us know in the comments below.

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