Disney+ on Thursday introduced its subscription streaming service plan with ads, but without support from one notable platform partner – Roku.
Disney+ with ads is priced at $7.99 per month (bumping the cost of its ad-free tier to $10.99 per month), and has support of more than 100 advertisers across major categories at launch. It also introduced new subscription plans with ads across the Disney Bundle and Hulu + Live TV.
However, Roku users can’t currently access the service. As outlined on the Disney+ website help center page: “Disney+ Basic is not currently available on Roku devices. This means that viewers are unable to sign up for this plan on Roku devices or stream Disney+ on Roku devices if viewers have this plan or the Disney Bundle Duo Basic or Trio Basic.” Disney+ with ads is also unavailable on Microsoft Windows desktop app.
Disney didn’t disclose a reason for launching without support on Roku – a dominant streaming platform in the U.S. NextTV reported that the company is still trying to work out a mutually agreed upon ad-revenue-sharing deal with Roku, citing a source familiar with Disney’s negotiations.
Support on Roku is notable, as the company commands a large share of the streaming player market in the U.S. According to data from Parks Associates on streaming media player brand share by installed base (not including smart TVs or gaming consoles), Roku in the third quarter captured a 40% share in the U.S., as did Amazon – with the two companies collective share of the space growing 7% year over year.
It isn’t the only SVOD to launch without a platform partner, as Netflix’s plan with ads debuted in November, sans support for Apple TV.
As for the Disney+ launch, while Roku might not yet be on board, a slew of advertisers have signed on. Disney said the basic tier is launching with a slate of blue chip brand advertisers and from all major holding companies including Dentsu, Havas, Horizon, IPG, Omnicom Group, Publicis, RPA, Stagwell, and WPP.
Disney+ with ads is launching with the same full content catalog that’s offered on the Disney+ premium plan, and allows users to create up to seven profiles per account and stream on up to four devices simultaneously.
Speaking on CNBC’s Squawk Box on Thursday, LightShed Partners analyst Rich Greenfield said that Disney+ with ads signals the company recognizes it’s relatively mature “meaning it’s reached most of the customers who are going to pay for Disney+ and now pushing aggressively on price.”
He noted in looking at the streaming business, Disney has lost $4 billion in the last 12 months, and needs a way to profitability.
“How they’re going to do it is raising what was probably too low of a price and starting to really push on price,” he said.
Family content also helps, as Greenfield said “Disney+ is a pretty sticky kids service,” and noted some people won’t want to take the 38% price increase to keep their service without ads and instead take the ad-supported option. This is fine in Greenfield’s view, who said, “Disney’s probably neutral to maybe even better off if you take the advertising product.”
It’s also a boon for advertisers that are craving more inventory, particularly as younger viewers are watching less and less traditional linear TV, according to Greenfield.
In recent analysis from Kantar, the research firm estimated that Disney could expect one in four of its loyal customers to drop down to the ad-supported subscription tier.