2023-11-01 10:59:41
Streaming with interspersed advertising is becoming the standard – at least as an optional offer. From November 1st, the Disney streamer will now also be offering a subscription that includes advertising – and is slightly cheaper than the ad-free subscription. Customers should see a maximum of four minutes of advertising per hour at the start – twelve minutes are currently allowed on private television.
Netflix had already taken this step a year ago. The promise of being able to offer an ad-free entertainment zone with paid streaming was at least partially broken – because the business model of the major platforms does not seem to work with the sale of subscriptions alone if prices are not to rise dramatically. Streamers’ high investments in films, series, shows and documentaries plus increased production costs require an additional source of income.
Amazon Prime Video will also follow suit in Germany from the beginning of next year – Freevee is already an ad-financed, free streaming offer that does not require an Amazon Prime subscription. However, the mail order company takes a slightly different approach to Prime Video than its competitors, who lower their prices for subscriptions with advertising. Amazon, on the other hand, will add advertising to existing Prime subscriptions, and ad-free streaming will then be available for an additional charge.
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The provider Paramount, which launched as a latecomer with its own platform in December last year, is also expected to offer an advertising-financed subscription from next year – but also has an offshoot, Pluto TV, like Amazon, which streams films and series for free and in return shows commercials.
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Even with Apple+ there was speculation about a possible ad-financed offer around a year ago – but so far there is no further evidence of an imminent introduction. Disney, on the other hand, provided the new streaming strategy on Tuesday in Berlin. The introduction of an advertising-financed offer leads, as this example shows, to a greater differentiation of the price range. Which at Disney+ now ranges from 5.99 euros/month (with advertising) to 8.99 euros/month (standard) to 11.99 euros/month (premium with 4K quality).
What is promised is that initially only series with commercials will be interrupted. In films and series there will be so-called pre-rolls, i.e. advertising beforehand. It is also promised that, if possible, viewers will not see one spot over and over again – an annoying phenomenon in the long run, but which can be solved technically – at least as long as there are enough advertising bookings. For children’s profiles, advertising is switched off or only partially possible depending on their age.
Eun-Kyung Park is Disney’s Germany boss
Source: Sven Hoppe/picture alliance/dpa
Disney’s Germany boss Eun-Kyung Park sees the diversification of the offering as an opportunity to attract new subscribers to the streaming service who have previously been hesitant because they may already use one or more other streamers. The barriers to entry should be lowered – especially since advertising is not a deterrent, at least for some target groups, but is accepted as a compromise for a cheaper subscription.
It is, of course, possible for users to convert their existing subscriptions to the reduced-price version – which is why they initially get the premium subscription from Disney, which is more expensive for new customers. At the same time, it is clear that the price limit will also be raised – cinephiles can pay more if they want to get better quality. The inexpensive advertising subscription becomes an argument for making complete advertising freedom more expensive.
In terms of content, Disney+ wants to continue working on becoming a platform for everyone. The Americans already have families with children and fans of Star Wars, Marvel and Pixar – now the word needs to get out even more that Disney is investing in productions like the series “Sam – a Saxon”, which was based on a true story and in which Criticism was very well received.
“German House” is coming
From November 15th, the series “Deutsches Haus” by Annette Hess (including “Weissensee”) can be seen, which is peppered with stars such as Iris Berben, Heiner Lauterbach, Anke Engelke and Max von der Groeben. The story of the first Frankfurt Auschwitz trial in 1963 is in itself predestined for public television – and now a flagship for Disney.
The in-house productions that Disney+ shows should be a little less than the competition, but more relevant. An approach that Sky Deutschland also pursued, but local productions there have been stopped for the time being due to economic problems. Compared internationally, Disney has the advantage of having access to several large studios and a huge inventory.
The new Indiana Jones, the series “Percy Jackson” and “Shogun” will soon be coming to the platform. But the Mouse Group, which has just celebrated its 100th birthday, also has to be careful financially. The stock market price has fallen by 30 percent in the past twelve months – Netflix also had to record a considerable crash on the stock market and is slowly recovering.
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CEO Bob Iger, who once launched Disney+, has already announced that he will reduce the number of productions. Netflix like Disney and other streamers have spent billions of dollars on new formats for years to build up their reach – in a gigantic and almost ruinous competition for the best productions. But times have changed – now it’s important to quickly switch to profit mode and open up new sources of revenue.
At the same time, according to American media reports, Disney is even considering selling investments such as the ABC television station. Despite its young age, the streaming service is at the core of the digital strategy, but it takes time and a lot of money.
With advertising, streaming is becoming more similar to the well-known (private) television. There is a danger here if the subscriber user experience deteriorates. Another side effect is that private broadcasters who refinance themselves exclusively through advertising face further competition for advertising revenue.
On the other hand, a cheap subscription could also prevent users from immediately canceling their membership to a streaming service if they want to reduce their household costs in the wake of inflation. According to Study by the management consultancy Simon-Kucher In the context of a recession, the willingness to pay for subscriptions drops from 15 to 10 euros, meaning that almost a third of streaming subscribers also plan to cancel a subscription in the coming year.
Which means nothing other than that the cut-throat competition in the streaming market has begun. An advertising-financed subscription is one of the measures that can prevent cancellation. This demystifies the business model of ad-free streaming – and shows viewers that entertainment cannot survive without consumption.
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