Disney CEO confirms company is exploring free streaming tier

Disney The Walt Disney Company ↗ 2.87% CEO Josh D'Amaro confirmed Wednesday that the company is actively exploring a free, ad-supported streaming option, a move that would mark a departure from the paid subscription model that has defined Disney+ since its 2019 launch.

"We're exploring a free product for consumers, one that will allow us to accomplish several goals and hopefully do that efficiently," D'Amaro said during Disney's fiscal third-quarter earnings call.businessinsider

A Three-Pronged Strategy

D'Amaro outlined three objectives a free tier would serve: expanding Disney's reach among price-sensitive consumers, growing advertising revenue by adding more inventory, and driving "top-of-funnel" subscriber growth for Disney+. He noted that Disney's streaming ad inventory is "fairly well sold," unlike some competitors, meaning additional slots would directly accelerate ad revenue.theverge+1

D'Amaro said the company has "nothing specific to announce today" but called it "definitely something that we're considering".thewrap

The confirmation follows a Business Insider report in July that Disney's chief product and technology officer, Adam Smith, discussed the possibility of free-tier content during a company town hall. The broader streaming industry has been moving in a similar direction — Paramount+ is exploring a "free front porch" offering, and Netflix ↘ 0.69% co-CEO Greg Peters said in mid-July that "a free offering could make sense in some markets".techcrunch+1

Record Streaming Profits Provide a Cushion

The disclosure came as Disney reported its strongest streaming quarter yet. Operating income for the company's SVOD entertainment business — Disney+ and Hulu — more than doubled to $712 million from $329 million a year earlier, on revenue of $5.5 billion, up 11%. Streaming operating margin reached 13% for the quarter.thewrap+2

Overall, Disney posted adjusted earnings per share of $2.06, beating Wall Street's consensus estimate of $1.86, on revenue of $25.2 billion. The experiences segment generated nearly $10 billion in revenue, up 10% year over year.variety+1

Streaming's Next Chapter

Beyond the free-tier exploration, D'Amaro outlined plans to make Disney+ the "digital centerpiece" of the company starting next year, integrating games, merchandise, and personalized experiences for subscribers. The company also announced a partnership with TikTok to bring fan-created Disney content into the Disney+ interface.theverge

The push toward free streaming reflects Hollywood's growing concern about competition from YouTube Alphabet Inc. ↘ 0.97%, which has steadily expanded its television presence through features like always-on "Stations" and creator-organized seasons.theverge