Disney Plus added ads because the company needed to lower the price of entry and offset the cost of content production

Disney Plus launched in 2019 as a premium, ad-free service at $7.99 per month. By 2022, the company had spent billions on original shows and films but was losing money on the service—subscriber growth had slowed, and the streaming wars were intensifying. In December 2022, Disney introduced a cheaper tier with ads at $7.99 per month (the original ad-free plan moved to $10.99), giving people a choice between paying less to watch with commercials or paying more for no ads.

The shift reflected a broader industry pattern. Netflix had introduced ads in late 2022 for the same reason: streaming services were burning cash faster than they could raise prices without losing subscribers. Disney's math was straightforward: a lower entry price attracts cost-conscious viewers, and ad revenue from those viewers helps cover the cost of producing and licensing content. The company was also under pressure from investors to show a path to profitability.

Key Takeaways

  • Disney Plus added an ad-supported tier at $7.99 per month in December 2022 because the ad-free plan was losing money despite millions of subscribers.
  • The original ad-free plan increased to $10.99 per month when ads were introduced, giving subscribers a choice between cost and ad-free viewing.
  • Streaming services spend billions on original content each year, and ads generate revenue that helps offset those costs without raising prices further.
  • The ad tier was introduced after Netflix launched its own ad-supported plan, following a pattern across the streaming industry to improve profitability.

How streaming services make money

A streaming service has two revenue sources: subscription fees and advertising. For years, Disney Plus relied almost entirely on subscriptions. Viewers paid a monthly fee, and Disney used that money to pay for content, server infrastructure, customer service, and everything else required to run the platform.

The problem was that content is expensive. A single prestige drama series can cost $10 million to $20 million per season. Disney Plus was producing dozens of shows and films annually, plus licensing existing content from Disney's vast library. The subscription price alone could not cover those costs and still turn a profit—especially when competitors were offering similar content at similar prices.

Adding an ad tier creates a second revenue stream. Advertisers pay Disney to show their commercials to viewers on the cheaper plan. That ad revenue reduces the amount Disney has to charge for the ad-free plan, making both tiers more attractive to different types of customers.

Why Disney Plus was losing money despite millions of subscribers

Disney Plus had over 150 million subscribers by late 2022, but the service was still unprofitable. The reason: subscriber growth had slowed, and the cost of content kept rising. Streaming wars meant every service was competing to produce the most popular shows and films, driving up production budgets across the industry.

Additionally, Disney Plus was bundled with Hulu and ESPN Plus in many markets, which meant revenue was split three ways. The company needed a way to increase revenue per subscriber without raising prices so high that people cancelled. An ad-supported tier solved that problem by offering a lower price point while generating additional income from advertisers.

The industry shift toward ads

Disney Plus was not the first major streaming service to add ads, but it was one of the largest. Netflix introduced an ad-supported plan in November 2022, just weeks before Disney. HBO Max (now Max) had always offered an ad-supported tier alongside its premium plan. Amazon Prime Video added ads to its base tier in 2023.

This shift reflected a maturation of the streaming industry. Early on, streaming services competed on the promise of ad-free viewing—a major selling point against cable television. As the market saturated and growth slowed, profitability became the priority. Ads were a way to improve margins without raising prices to unsustainable levels.

What changed for Disney Plus subscribers

Existing subscribers who had the ad-free plan were not forced to watch ads. However, their monthly cost increased from $7.99 to $10.99 when the ad tier launched. New subscribers could choose between the cheaper ad-supported plan or the more expensive ad-free plan.

The ad-supported tier includes roughly 4 to 5 minutes of ads per hour of content, similar to traditional television. Some content is not available on the ad tier due to licensing restrictions—certain films and shows have contracts that prohibit ad-supported distribution.

How many ads you see on the ad-supported plan

Disney Plus shows approximately 4 to 5 minutes of advertising per hour of content on the ad-supported tier. This is comparable to cable television, where a typical hour of programming includes about 8 to 9 minutes of ads split between the network and local stations. On Disney Plus, all ads are national—there are no local commercials.

Ads appear before the content starts, during the show or film, and sometimes after it ends. You cannot skip ads on Disney Plus, unlike YouTube or some other platforms. The exact placement and frequency can vary depending on the content and your region.

Whether you should choose the ad-supported plan

The ad-supported plan makes financial sense if you watch Disney Plus regularly and do not mind commercials. At $7.99 per month, it costs the same as the original ad-free plan did at launch, so you are not paying more than early subscribers did. If you watch a few hours per week, the cost savings add up over a year.

The ad-free plan at $10.99 per month is worth it if you dislike interruptions, watch frequently, or share the account with others who have different preferences. Some people find ads distracting during movies or dramatic moments; others do not mind them. Your tolerance for ads and your viewing habits should guide the choice.

Frequently Asked Questions

Can I switch between the ad and ad-free plans?

Yes. You can change your plan at any time through your Disney Plus account settings. If you downgrade to the ad-supported plan, the change takes effect when ready. If you upgrade to ad-free, you may see ads until your billing cycle renews, depending on when you make the change.

Do I have to pay more if I already have Disney Plus?

If you had the ad-free plan before ads were introduced, your price increased to $10.99 per month. You were not forced to switch to the ad-supported plan, but the ad-free option now costs more. New subscribers can choose either tier from the start.

Will Disney Plus remove the ad-free plan eventually?

Disney has not announced plans to discontinue the ad-free tier. However, the company has raised the price of the ad-free plan twice since 2022, and may continue to do so. The ad-supported plan remains available at a lower price point.

Are there any shows or movies not available on the ad-supported plan?

Yes. Some content has licensing agreements that prohibit ad-supported distribution. This typically affects certain films and older licensed shows. Disney Plus displays which titles are unavailable on the ad tier before you try to watch them.

Do other streaming services have ads now?

Most major streaming services now offer ad-supported plans: Netflix, Max, Amazon Prime Video, Hulu, and Paramount Plus all have cheaper tiers with ads. Only Apple TV Plus remains ad-free, though it costs more per month than ad-supported alternatives.