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Disney raises streaming prices after rolling out ad-supported tier

Yahoo Finance's Allie Canal discusses the official launch of the Disney+ ad tier and the new cost structure of Disney's streaming service plans.

Video transcript

BRIAN SOZZI: The cost of Disney+ is headed higher as the media giant looks to stem losses for its streaming business. Yahoo Finance media reporter Allie Canal is here with the details. Allie, the price is going up, and now it's, what, over 10 bucks.

ALLIE CANAL: Yes, so if you want the ad-free version of Disney+, you're now going to have to pay 10.99. The ad-supported version is going to be $7.99. And we're seeing this at a time when a lot of streaming companies, they are hiking their prices. We've spoken to a few media executives that said if you're not seeing price hikes now, you will be very soon. Paramount Global CEO Bob Bakish being one of those.

But you're taking a look at your screen now on all the varying prices. We had Netflix roll out their ad-supported tier last month, $6.99-- pretty competitively priced there. It'll be interesting to see how many people trade down to the ad-supported versions.

There was a new study by Kantar Research that showed one in every four Disney+ users will likely trade down to that ad-supported version, so that translates to roughly 46 million out of the whole user base of Disney+, which is currently 164 million. So that'll be something to track in the quarters to come. But overall, this is a play to add to profitability when at a time all these media companies are bleeding money.

BRAD SMITH: Is it clear from the Disney strategy what content will be on that ad-supported tier versus what we saw with Netflix, where it wasn't clear what content people would have access to with that ad-supported--

ALLIE CANAL: Yeah, and Netflix is still dealing with that due to various licensing restrictions. Ted Sarandos said that 10% of content is not available on that ad-supported service. It's a bit different for Disney because they own the majority of their content. They really lean heavily on "Star Wars" and-- Sozz, I know you're a really big fan of "She-Hulk."


ALLIE CANAL: That's all going to be available on ad-supported. But in terms of Netflix, yes, that's something they're going to have to figure out down the line. Ted Sarandos did say that's a number that they're looking to hopefully bring up over time. But it's going to take a little bit. So a few downside risks there if you're going on ad-supported. And another thing for both Disney and Netflix is you can't download shows or movies if you have ad-supported due to those technical complexities. So another thing to watch.

BRAD SMITH: All right, just needed to make sure I'd still have access to some of that Buzz Lightyear content as well.

ALLIE CANAL: Of course.

BRAD SMITH: Guys, thanks so much. Allie Canal breaking that down, Yahoo Finance's own.