Walt Disney CEO Josh D'Amaro revealed during an investor earnings call that the company is evaluating the launch of a free, ad-supported streaming service to consumers. As advertising becomes increasingly crucial for streaming platforms to achieve profitability and boost user engagement and subscription numbers, Walt Disney has initiated this assessment.
The company also expressed satisfaction with its upfront advertising commitments, noting that all ad slots for the Super Bowl, set to air on ABC and ESPN in February next year, have been sold out. Walt Disney may be expanding its advertising strategy. CEO Josh D'Amaro told investors on Wednesday's earnings call that the company is studying the introduction of a free streaming product monetized through ads.
"We see this as a channel to reach price-sensitive consumers, and expanding our audience is a key strategic priority," D'Amaro stated. He added that compared to competitors with ad-supported streaming services, Walt Disney has ample advertising inventory to effectively accelerate ad revenue growth. D'Amaro noted, "A free streaming product could attract potential new subscribers to Disney+, broadening our customer acquisition funnel." However, he did not provide a formal launch timeline. Earlier reports from Business Insider indicated that Walt Disney was exploring free streaming options.
As subscription fees for major streaming platforms continue to rise, free ad-supported platforms like Fox's Tubi, Paramount's Pluto TV, and Roku's own channel are attracting a growing number of viewers. Mainstream platforms such as Netflix and Disney+ have also introduced lower-priced ad tiers, which have become key strategies for attracting users and improving profitability. Despite intensifying competition, demand for sports and streaming advertising remains strong.
Walt Disney announced on Wednesday that all ad slots for the Super Bowl, scheduled to air on ABC and ESPN in February next year, have been sold out. The Super Bowl consistently commands the highest ad rates for live TV, with this year's 30-second spots reportedly selling for $9 million each. Chief Financial Officer Hugh Johnston told investors that the company is highly satisfied with the deals secured during the upfront advertising negotiations, with ad commitments growing by double digits year-over-year. Major live events like the College Football Playoff National Championship, the Grammy Awards, and the Oscars also drove advertising sales.
"Overall, the market for sports advertising remains robust, but competition in the streaming ad space is intensifying, and the supply of ad inventory continues to increase," Johnston said during the call. He noted that the growing supply of streaming ad resources is putting pressure on ad pricing. In its latest quarterly report, Walt Disney disclosed that lower ad rates negatively impacted its overall entertainment segment revenue.