Disney+ will launch a cheaper ad-supported category later this year

Disney announce On Friday, a new ad-supported tier for the Disney+ streaming service that will launch in the US later this year.

Disney has not provided a release date or price for the new tier. The new ad-supported tier will expand internationally in 2023.

The company said in a press release that the new offering will be a “brick” in achieving its goal of reaching 230 million to 260 million Disney+ subscribers by 2024.

Adding the ad support level will allow Disney to increase its average revenue per user – a metric that currently tracks most competitors. Comcast CEO, Brian Roberts, said last quarter of NBCUniversal’s Peacock had an ARPU of nearly $10 per month per user, driven largely by advertising. Average revenue per user per month for Disney+ in the US and Canada was $6.68 last quarter.

Warner Media HBO Max, Paramount Global Paramount + and Discovery Discovery+ is among the streaming services that already offer ad-supported streaming options.

Hulu, which is mostly owned by Disney, already offers an ad-supported product for $6.99 a month, compared to the ad-free service, at $12.99 a month. Disney is streamlining backend technology to enable ads to be sold on all streaming products, according to a person familiar with the matter.

Disclosure: Comcast is the owner of CNBC’s parent company NBCUniversal.

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