Disney and Netflix Consider Free Ad-Supported Tiers as Subscription Growth Stalls

Disney CEO Josh D'Amaro used the phrase "exploring a free product" on the company's latest investor call, and Netflix co-CEO Greg Peters made similar noises last month. This is the first time either has admitted out loud that the price-hike playbook is running out of runway.

The math behind the reversal

Disney pushed US streaming prices up twice since 2024. The October round added $2/month to ad-supported plans and $3/month to ad-free. Netflix matched that cadence, with its March hike tacking on $1 for ads tiers and $2 for ad-free.

Here's why a free tier suddenly makes sense: both services are now bumping up against subscriber growth ceilings, and ad revenue is picking up the slack. D'Amaro spelled out the logic — Disney's ad inventory is largely sold through, so a free tier feeds existing advertiser demand rather than flooding the market with unsold slots. That positioning puts Disney ahead of most AVOD competitors, which are still trying to fill their ad loads.

• Disney angle: Top-of-funnel acquisition. D'Amaro framed a free tier as a way to pull in "price-sensitive" customers who'll eventually convert, calling it a "strategic priority."
• Netflix angle: Market-specific. Peters was explicit that cannibalization of paid tiers is the main risk, and that any free launch needs an "effective scaled ads business" already in place.
• What neither will commit to: No countries. No catalog. No launch window.

What to actually do right now

Don't cancel anything. Disney's free tier is still an idea that's been raised internally twice and committed to zero times — Adam Smith, Disney's chief product and technology officer, reportedly brought it up at a staff meeting without sharing a timeline or scope. Netflix's Peters was even blunter: "free is something that we're going to continue to consider, but we have no near-term plans to launch something."

• If you're on the ad-supported tier: You're already the target audience for whatever free product lands. Expect more ads per hour, not fewer.
• If you're paying ad-free: You're the segment both companies are most worried about cannibalizing. Watch for feature gating — a free tier will likely be stripped down to push upgrades.
• If you're sharing passwords or stacking subscriptions: Free tiers would give you a legitimate exit ramp, but only if the catalog includes what you actually watch. Hold off on any reorganization until Disney names countries and Netflix names markets.

Verdict: Interesting signal, zero action required. The price hikes already happened; the free tier is still vaporware. Treat your current subscription decisions based on what the services are doing today, not what executives are mulling on quarterly calls.