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Disney Plus to Launch a Cheaper Tier With Ads Late This Year

Disney didn't specify pricing for the new tier nor changes to its current ad-free one, after previously hinting at a price hike late 2022.

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Disney Plus is joining the widening ranks of services offering both ad-free and ad-supported options. 
Sarah Tew/CNET

Disney Plus will introduce a cheaper, ad-supported subscription in the US late this year to complement the ad-free subscription it already offers, Disney said Friday. The company said the ad-supported option would widen to Disney Plus internationally next year.  

Disney didn't specify the new tier's price or launch date, nor did it indicate whether the price of its current, ad-free membership would be affected by the introduction of the new option. In the US, Disney's ad-free subscription is currently $8 a month. 

In February, Disney CEO Bob Chapek hinted the company might be in a position to raise Disney Plus prices after September. Any price increase would be the second for Disney Plus. The service launched at $7 a month in November 2019 in the US, and the monthly price went up by $1 in March 2021.

Adding a cheaper option for Disney Plus would make it easier for price-sensitive people to sign up. As the ranks of streaming services have swelled in the last two years, the number that people consider adding to their monthly budgets has gone up, too. But Disney Plus is already among the cheapest streaming services of its kind, and Disney executives have repeatedly noted that the service's relatively low subscription price would rise as it pumps itself full of more programming. 

Lowering the price hurdle is especially important for upstart services like Disney Plus. Beyond that, these cheaper tiers with advertising can also be more profitable than the ad-free ones, and Disney already has a long track record with the practice. Its Hulu service has offered a cheaper, ad-supported level for years.

The move puts Disney Plus among the growing ranks of services defecting from the ad-free-only norm established by Netflix, the world's dominant streaming service, with more than 221 million global members. HBO Max, Peacock and Paramount Plus offer tiers that include commercials and ads in exchange for a lower subscription price. 

"Expanding access to Disney Plus to a broader audience at a lower price point is a win for everyone -- consumers, advertisers, and our storytellers," said Kareem Daniel, the chairman of Disney's division in charge of streaming. "More consumers will be able to access our amazing content. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families."

Disney Plus currently offers a single option for an ad-free subscription, which in the US is priced at $8 a month or $80 a year. By comparison, Netflix, which has no ads, offers its cheapest tier at $10 a month, while its most popular plan is $15.50. Only Apple TV Plus, at $5 a month, is cheaper than Disney Plus among the main competitors. 

Among the services that have ad-supported options, Hulu by itself is $7 a month with ads and $13 a month ad-free. Paramount Plus charges $5 for its tier with advertising, and $10 for the ad-free version. HBO Max is $10 a month if you watch with ads or $15 a month to strip out all commercials. 

(You can also bundle Disney Plus with ad-supported Hulu and ESPN Plus for $14, or with ad-free Hulu and ESPN Plus for $20 a month.)

On Friday, Disney said that an ad-free tier was crucial for it to reach its goal of 230 million to 260 million subscribers by its 2024 fiscal year. Disney's 2022 fiscal year began in October. The service had 129.8 million subscribers as of Jan. 1, after adding 11.7 million members in the last three months of 2021.

The Information earlier reported Thursday that Disney Plus was considering an ad-supported tier.

Read more: Disney Plus: When and How to Stream Eternals, Turning Red and Everything Else