Payment platforms open to cheaper versions that include ads

The question circulates through the audiovisual industry: what if the future of payment platforms included ads?

Although it is a trend that has existed for a long time in the Internet television landscape, it is now extending to services that until now had left out advertising as a source of income and opted to be financed only by the payment of their subscribers.

Disney + has revived the conversation in recent days by announcing that in the fall, when it turns three years since its birth, it will launch a cheaper version of its platform in the United States that will include ads.

The plan is to start at home and extend that model to other countries throughout 2023.

For company executives, this will be a way to grow the number of Disney+ users.

They hope that, with a lower price, more subscribers will arrive and, at the same time, they will see their income grow due to the presence of advertising.

Whoever wants it, will be able to keep the version without ads by paying a slightly higher price than the offer with advertising.

In a statement, Disney describes this new model as "a brick in the company's path to achieve the long-term goal of reaching between 230 and 260 million subscribers on Disney + by the year 2024".

The platform ended 2021 with 129.8 million users worldwide.

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Shortly after Disney made its plans public, eyes turned to Netflix.

In an investor conference, the company's CFO, Spencer Neumann, said an ad-supported option was not currently in his plans, but added: "Never say never."

In this way, a platform that has always radically refused to include ads opened the door to this possibility.

And it added fuel to the debate about the future of payment platforms, especially after the company lost almost 30% of its stock market value in the last year after lowering its expectations for subscriber growth.

In reality, Disney + will only be copying models that already exist and that are very well received in the United States.

There, HBO Max launched a cheaper option with ads a year ago.

Until now, HBO original content had been excluded from ad breaks.

However, now your original movies will also be able to include ads when viewed on your platform.

The series, for now, will continue without interruption.

In the United States, Hulu, a platform owned by Disney, was a pioneer in offering a paid subscription without ads and another somewhat cheaper one that includes advertising, which is the preferred choice of most of its subscribers: specialized media estimate that 60% of its subscribers opt for the cheapest version with ads.

Peacock, the NBCUniversal platform that operates in the United States, also has a version with and without ads.

By the end of 2021, it had 24.5 million active users, and according to Brian Roberts, CEO and president of Comcast, which owns NBCUniversal, 80% of consumers preferred an ad-supported version to a more expensive ad-free version.

Although Internet TV is still in a growth phase, attracting new subscribers and keeping them is becoming more difficult in a landscape full of options that forces potential customers to have to choose if they do not want the bill to rise too high.

In order for the platforms to obtain the budget they need to maintain the level of production required by this model, one option is to raise prices, with the risk of generating rejection and unsubscribes among their subscribers.

Disney and WarnerMedia (the conglomerate to which HBO belongs) plan to double their subscribers in two or three years, an objective that, seeing the slowdown that Netflix has suffered, could require cheaper offers to attract new audiences.

Experts also predict price increases in versions without ads.

free internet tv with ads

In addition to the services that opt ​​for mixed models, in the current audiovisual scene there are also platforms that offer free content with ads.

This is the case of Pluto TV, present in Spain for a year and a half, which offers live channels and content on demand.

Rakuten TV also has a free version with ads and a paid version.

On YouTube, the popular free version with advertising is added to the

without interruptions.

In the United States and Asia, revenue from ad-supported platforms exceeded revenue from services sustained only by subscriptions (and without advertising) in 2020: according to a study by the specialist telecommunications and media consultancy Omdia, platforms with advertising generated $40 billion in those places, compared to $32 billion for those without ads.

Another Samsung study showed that in 2020, video-on-demand services supported by subscriptions alone grew by 35%, while platforms with ads grew by 74%.

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