Disney Says It's Exploring a Free, Ad-Supported Streaming Tier After Years of Price Hikes

Disney is thinking about giving some of its streaming content away for free. CEO Josh D'Amaro told investors on a Wednesday earnings call that the company is "exploring a free product" to reach customers who won't pay for a subscription, according to a transcript cited by Ars Technica.

D'Amaro, who took over as Disney's chief in March after Bob Iger's exit, called expanding Disney's reach to "price-sensitive" customers a "strategic priority." He was careful not to promise anything. "Nothing specific to announce today, but definitely something that we're considering," he said.

The pitch is straightforward. Disney already sells most of its available ad inventory on its current ad-supported tier. More free viewers means more ad slots to sell, and D'Amaro said that would "accelerate our ad revenue growth" faster than most of Disney's ad-supported competitors could manage, since they already have excess unsold inventory.

There's also a subscriber-funnel angle. A free tier, D'Amaro said, "could help us drive top-of-funnel Disney+ subscriber growth." That's corporate-speak for getting people hooked on Disney content for free, then upselling them into a paid plan later.

Details are thin

Disney hasn't said what a free service would actually contain, when it might launch, or whether it would be a standalone app or a stripped-down mode inside Disney+. CNBC reported the company made no formal announcement beyond the general concept.

Business Insider reported last month that Disney was internally discussing making some Disney+ content available without a paywall, according to two people familiar with the matter. That report said Adam Smith, Disney's chief product and technology officer, raised the idea with streaming employees but gave no timeline or scope.

Disney isn't alone in circling this idea. Netflix co-CEO Greg Peters said on his own company's investor call last month that a free tier "could make sense in some markets," but flagged the risk of "cannibalization of paid tiers" and said Netflix has "no near-term plans to launch something." Peters also noted that a free ad-supported product only works economically in a market where the company already has a scaled advertising business.

Why now: the subscription math stopped working

Free, ad-supported streaming services, known in the industry as FAST channels, are already pulling serious numbers. Outlets like the Roku Channel, Tubi, Pluto TV, and YouTube are drawing an estimated 50 to 80 million average monthly users, per figures cited by Breitbart's Nolte.

Meanwhile, the subscription model is hitting a ceiling. Disney+ had 131.6 million subscribers as of November and Netflix had over 325 million as of January, according to Ars Technica, but both companies have leaned on repeated price increases to grow revenue rather than pure subscriber growth. Disney+ has raised U.S. prices twice since 2024, most recently in October, when ad-tier plans went up $2 a month.

There's a tension worth naming plainly. Disney and Netflix spent the last several years training customers to pay more for less patience with ads, then hiking prices again once people were locked in. Now that subscriber growth has slowed and customers are fed up, both companies are eyeing free tiers funded by the same advertisers who already pay top dollar for their live events.

The ad business is booming even as streaming ad rates soften

Disney also told investors it has sold out ad inventory for the upcoming Super Bowl airing on ABC and ESPN in February, with 30-second spots reportedly going for $9 million, according to CNBC. Disney CFO Hugh Johnston said the company's annual "upfront" ad commitments were up double digits versus last year, driven by marquee live events like the College Football National Championship, the Grammys, and the Oscars.

Johnston also acknowledged the flip side: increased competition in ad-supported streaming has put pricing pressure on ad rates generally, and Disney's quarterly earnings showed lower ad rates weighing on revenue for its entertainment unit. Live sports advertising is strong. Everyday streaming ad inventory is getting more competitive and cheaper to buy.

Nothing here is finalized. No launch window, no pricing structure, no confirmation of which shows or movies would sit behind a free wall versus a paywall. The open question is whether Disney treats this as a genuine standalone free product, similar to what Tubi or Pluto TV offer, or a limited preview mode designed mainly to funnel free users toward a paid Disney+ subscription. Investors and consumers alike will be watching Disney's next earnings call for whether "exploring" turns into an actual plan.