DIS Stock Alert: What to Know as Disney Debuts Ad-Supported Tier

  • Walt Disney (DIS) announced it has officially launched its new ad-supported tier of Disney Plus.
  • This move appears to be an effort to achieve profitability and compete against other streamers.
  • DIS stock was flat to slightly higher in early trading today.
DIS stock - DIS Stock Alert: What to Know as Disney Debuts Ad-Supported Tier

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Walt Disney (NYSE:DIS) might be the king of theme parks, but it’s not faring quite as well in the content-streaming market. Inflation and competition from the likes of Netflix (NASDAQ:NFLX) have kept Disney’s streaming business unprofitable. However, DIS stock investors may be encouraged as the company plans to introduce a basic, affordable ad-supported streaming service option.

Disney’s streaming unit lost $1.5 billion during this year’s third quarter. That poor result left some shareholders to wonder whether the Disney Plus streaming service could successfully compete with Netflix’s offerings.

As you may be aware, Bob Iger recently returned to Disney’s CEO position. He’s implementing some changes at Disney, and apparently one of them is the introduction of an ad-supported Disney Plus service tier.

This service level costs $7.99 per month; meanwhile, the ad-free version of Disney Plus costs $10.99 per month. Whether consumers are willing to put up with advertisements to save $3 per month remains to be seen.

What’s Happening with DIS Stock?

It looks like investors are neutral to moderately bullish on this development with Disney Plus. As of 11:00 a.m. Eastern, DIS stock traded in the green by less than 1%.

Perhaps they’re not super impressed with Disney’s introduction of an ad-supported service level because Netflix’s ad-supported tier, at $6.99 per month, is more competitively priced. Also, Netflix Co-CEO Ted Sarandos recently revealed it’s “likely there will be multiple ad tiers over time.”

In other words, Netflix could continue to win the streaming war against Disney. Still, Kevin Krim, CEO of EDO, an advertising-measurement platform, seems to be on board with Disney’s foray into content streaming. “Disney Plus is the fastest growing streaming platform right now, and the Basic plan offers yet another step toward its profitability,” Krim stated.

So, there’s actually a lot going on even though DIS stock isn’t moving much right now. Indeed, it may take some time for investors to pronounce judgment on Disney’s new strategy to compete with Netflix and other content streamers.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


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