After jacking up prices, Disney+ and Netflix consider offering free alternatives

Disney is “exploring a free product” for streaming customers, CEO Josh D’Amaro confirmed in a call with investors today.

D’Amaro, who succeeded Bob Iger as Disney’s chief in March, said that a free Disney-owned streaming service would help Disney reach more “price-sensitive” customers, which is a “strategic priority” for Disney, according to a transcript of the call.

A free streaming service would also generate more ad revenue, which has become increasingly important for streaming services challenged by plateauing subscriber numbers, subscriber churn, and competition from cheaper and free rivals.

“Unlike a lot of our AVOD [advertising video on demand] competitors, we’re fairly well-sold, meaning more inventory would actually help us accelerate our ad revenue growth,” D’Amaro said.

A free streaming product might also generate more interest in Disney+ subscriptions, the executive added.

“A free offering could help us drive top-of-funnel Disney+ subscriber growth,” D’Amaro said, using a marketing term referring to the earliest stage of the customer acquisition funnel, where the focus is on building awareness. “Nothing specific to announce today, but definitely something that we’re considering.”

Disney executives didn’t detail what a free, Disney-owned streaming offering would look like. But a report from Business Insider last month claimed that the company was “discussing making some content accessible on Disney+ without a paywall, according to two people familiar with the matter.” The report noted that Adam Smith, chief product and technology officer at Disney, discussed free streaming content during a company meeting for streaming employees but “didn’t share a timeline for this initiative or a sense of the scope.”

A free tier could help Disney+ stand out from other subscription video-on-demand platforms, like Netflix and HBO Max, amid frustration with constantly rising prices.