Disney+ to Launch Ad-Supported Subscription Offering

Entertainment and media major The Walt Disney Company (NYSE:DIS) recently revealed that its streaming service Disney+ will enhance its offerings by introducing an ad-supported subscription in late 2022.

Following the news, shares of the company fell over 3% to close at $140.36 in Friday’s extended trading session.

Strategic Impact

The feature, which will be made available in the U.S. initially and then subsequently expanded internationally in 2023, is aimed at achieving the company’s long-term target of 230-260 million Disney+ subscribers by 2024.

With premier ad-supported streaming services like Hulu and ESPN+ in its portfolio, the new offering is expected to bring viewers contextually relevant advertising.

Management Commentary

The Chairman of Disney Media and Entertainment Distribution, Kareem Daniel, said, “Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone – consumers, advertisers, and our storytellers. 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.”

Stock Rating

Recently, Citigroup analyst Jason Bazinet reiterated a Buy rating on the stock with a price target of $200, which implies upside potential of 42.1% from current levels.

The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 14 Buys and 5 Holds. The average Disney stock prediction of $193.89 implies that the stock has upside potential of 37.8% from current levels. Shares have declined 30.3% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Disney’s performance this quarter.

According to the tool, year-to-date, the Disney website traffic recorded a fall of 4.96%, compared to the previous year.

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