Whenever I would be reporting on studies that would follow the launch or relaunch of a channel, I would forever be grilled by dubious executives and stakeholders wondering how something that so many people indicated they would subscribe to could yield such underachieving ratings. After all, they would attest, didn’t we all develop such a compelling mission statement and robust content that any sane person should be dropping everything else in their life to watch every possible minute?
Ridiculous as that may sound, I actually would have that level of conversation with marketing executives who came from business sectors where success was measured by a purchase–an investment of money that frequently can be impulsive and often takes less than a second. What I would attempt to explain is that when it comes to entertainment, people are investing something infinitely more valuable to them–TIME. Many would then counter with something like “OK, so what would you say is the value of time?”.
Well, Disney attempted to answer that ephemeral question during their third quarter earnings call., which featured announcements about increases in the monthly prices of its three core streaming services, Disney+, Hulu and ESPN+. For Disney+, it was the first significant detailed report of what their new ad-supported tier would cost. And if you do the math, at least in the case of that service Disney apparently thinks your time is worth about a dime a day,
The headline-making news of the price increase for Disney+ had social media and consumer advocates abuzz yesterday, when it was postured that Disney+ will raise its monthly price to $10.99/month in early December, a jump of more than a third from its current $7.99/month price point. But at the same time, Disney+ with ads was announced at the exact same $7.99/month figure the service is currently priced at. So, in effect, you can continue to pay the same price for Disney+ if you will accept the presence of ads.
And the reality is–the majority of people, despite their bitching and moaning, are more than fine with that. A Deloitte study released in spring 2021, as reported by The Streamable, recapped as follows:
Many consumers are happy to watch ads if it means they’re able to cut down on their monthly subscription costs. 60% of those surveyed are okay with watching a light amount of ads for a lower monthly subscription cost. A light load of ads would be six or fewer minutes per hour of streaming.
As reported yesterday by TechCrunch, Disney+ Premium will feature no more than four minutes per hour of ads, and none in pre-school programming. Check.
To be sure, a substantial percentage of younger consumers prefer ad-free content. The same Deloitte study noted that 48% of Generation Z (born between 1997 and 2015) are willing to pay extra for no ads. 46% of Millenials (born between 1981 and 1996) will pay to avoid ads. But that also means more than half of those under-40s are OK with ads–and that study was conducted last year, before the current inflation spiral set in.
And yes, Hulu is being called out for price increases of its own. In early October its ad-free version will jump to $14.99/month from its current $12.99 cost, while Hulu with ads will rise a buck to $7.99. So net-net, that’s less than a quarter a day. But since Hulu has approximately the same relative proportion of incremental ad load than the proportionate price gap between ad-free and with ads, from an objective perspective, they’ve apparently maintained the same value on your time as the Disney+ package offers.
And if you’re a Disney Bundle customer, your net increase for no ads is 16 cents a day. And the current price of the most premium package–ad-free Hulu, ad-free Disney+ and ESPN+ –will remain at $19.99 per month. Full disclosure: that’s my current package, so I’m truly indifferent to all of this noise; plus I’m slightly over 40 anyway, so I was even less likely to complain.
And I’ve got a good deal of company. In the same earnings call Disney announced they had added over 14 million new subscribers in the most recent quarter, which now places them above Netflix in that realm. Yes, they have three cracks at the pinata but on a combo-to-combo basis the two services are arguably competitive, and if you’re a sports lover the Disney Bundle is a clearly more robust package and a unquestionably superior value proposition,
So when you dig a little bit beneath the surface, much as the knee-jerk reaction by media reporters who seem to have a bias of entitlement filter into their reporting, it’s not that big a deal, assuming you’re working. And if you do have to make a choice in order to make this work for you, so be it. We’re talking pennies a day, for God’s sake. You can find that under a rock if you actually look.
Time is a far more precious and limited commodity than money, I would advise those apopletic margeting genuises. You better have something really compelling to get people to invest that. With the expansion of content on Disney+ to include more adult-oriented series, Hulu firing on all cylinders with the FX originals plus its allegedly new breakout PREY (we have to take them at their word that it’s as successful as they claim), it would seem that their value proposition as they have their hands out for a price bump is as decent as it’s ever been. And only the consumer will be able to decide if the continued investment of time is worth it. And that’s ultimately on them, not us.
Until next time…