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Disney to launch ad-supported tier on December 8

Yahoo Finance's Allie Canal previews Disney's ad tier ahead of its debut.

Video Transcript

RACHELLE AKUFFO: Streaming services once known for being commercial-free still changing their tune, starting with the upcoming launch of Disney's ad-supported tier. And Netflix's co-CEO also touting more plans for ads. Well, for more on this new trend, let's bring in Yahoo Finance's Alexandra Canal. So, no more freebies.

ALEXANDRA CANAL: That's right, Rachelle. A lot happening in the streaming space, specifically when we talk about ad-supported. Disney's ad-free tier is going to officially launch tomorrow on Thursday at a price point of $7.99. That means that Disney's original plan without ads, that's going to cost 3 bucks more, $10.99. And according to a new study from Kantar Research, about one in four Disney+ subscribers will trade down to that ad-supported tier. So that translates to roughly 46 million out of the total subscriber base for Disney+, which is 164 million.

Now, of course, this ad tier comes just one month after Netflix's own ad-supported version. The Netflix ad tier costing $6.99, so $1 less than Disney's and pretty competitively priced when we look at the streaming landscape, specifically those ad tiers. And like you said, we did hear from Netflix co-CEO Ted Sarandos yesterday speaking at a UBS conference. And he said just like Netflix has multiple premium tiers, you can expect to see multiple ad tiers over time. So that's something to keep an eye on.

I will say that there are a few downsides if you subscribe to the ad tier. For example, you cannot download certain shows or movies due to technical complexities surrounding the ads. In addition, some programming is not available through this ad tier. Sarandos says, currently, about 90% of content is available. He's hoping to up that number over time. And that's due to a variety of restrictions that Netflix is still figuring out.

But overall, really interesting to see Netflix doubling down on ads, considering out of all the streaming giants, they were the ones that were the most resistant and the most hesitant.

AKIKO FUJITA: Allie, can we talk about "Wednesday"? I mean, I'm going to say that this is a Netflix show that I saw the trailer, and I just said, no, pass. I'm not going to watch this. And now it is one of the all-time most popular shows.

ALEXANDRA CANAL: I agree, Akiko, and I think a big part of this is word of mouth. If you just look at the numbers here, for the week of November 28, the show racked up over 411 million viewing hours. That brings its grand total to 752.52 million hours viewed. That's according to Netflix.

And it makes this series the third most popular English language show of all time, right behind "Stranger Things, Season 4" and "Monster," the Jeffrey Dahmer story. Many believe that this will inch into that number two spot and defeat Dahmer, given where things are currently trending. Of course, the number one show of all time on Netflix is still "Squid Game," so I'm not quite sure that "Wednesday" will rack up the numbers to beat that one. But still, it's so impressive.

And if you look at some of the original programming that Netflix has released this quarter, it's not just "Dahmer" and "Wednesday," but also "The Watcher" has been really successful. On December 28, we'll see that "Glass Onion," "Knives Out" sequel. So it's going to be interesting to track that and see how that translates to the fourth quarter earnings that we'll get in 2023.