As one of the leaders in streaming video, investors and others watch Disney (NYSE:DIS) closely. The company rolled out its new ad-supported tier earlier today, to surprisingly little movement from the market.
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Previously, Disney+ came in two flavors: a stand-alone streaming service for a flat rate or as part of a bundle with Hulu and ESPN. Now, with this deal, customers get one more option. The ad-supported Disney+ bundle costs $7.99 a month. The version without ads runs $10.99 per month.
Outside analysts consider the move a smart one. Geetha Ranganathan of Bloomberg Intelligence notes that such a move was “critical” for Disney+’s future success. While there are signs that advertising spending is in decline—a move that hit Paramount (NASDAQ:PARA) hard yesterday—Ranganathan dismisses those concerns in light of Disney’s consumer base and newfound value.
Further, EDO’s Kevin Krim noted that the affordability of the ad-supported tier will make Disney+ that much more attractive. Given that other platforms are also raising prices going into the holidays, the comparatively mild hikes and the new option of the ad-supported tier may ultimately help.
Given that Netflix also announced new potential pricing options with ad support, Disney’s move may insulate it against future competition.
Hedge funds are especially interested in Disney+’s performance, as they’ve recently swung to “very positive” on the company’s operation. Hedge funds were reducing their position on Disney stock since October 2021. However, in the last three months, hedge funds bought Disney shares again, adding 2.9 million shares in the last quarter.
