Disney+ announces a cheaper tier to boost subscriber growth and ARPU

Walt Disney Co (NYSE: DIS) is set to launch a new ad-supported tier for its streaming service in the United States this year, the entertainment and media conglomerate revealed in a press release on Friday.

Disney dubs the new tier a ‘building block’

The exact date of launch and how much is the new tier going to cost the U.S. consumers is yet to be known. The ad-supported tier, Disney added, will also be introduced internationally in 2023.

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In the press release, the American multinational dubbed its new offering a “building block” in hitting its target of 230 million to 260 million subscribers on Disney+ by 2024. The California-based company is convinced the new tier will help boost ARPU.

Last month, veteran investor Morris Mark said Disney was a fairly cheap stock to own.  

Jim Cramer explains shareholders’ response

While Disney is incredibly bullish on the launch of an ad-supported tier, shareholders seem not to like the announcement, as reflected in the stock price that’s down 3.0% on Friday.

Jim Cramer, however, attributes the price action solely to Russia that has now seized control of Ukrainian nuclear power plant. On CNBC’s “Squawk on the Street”, he said:

Market’s focused on how much the threat of nuclear attack is impacting Europe, and therefore, will impact the U.S. You’ll see stocks that’re down today that had unbelievable quarters. But when the smoke clears, people will see who did well, and they’ll look at Disney and say that was a good idea.