Nearly one in four US Disney+ subscribers will switch to a cheaper, ad-supported tier at launch this week, according to a study by Kantar

When Disney launches the ad-supported version of Disney+ later this week, about a quarter of current U.S. subscribers are expected to opt for the cheaper ad-supported version, according to a new study by Kantar.

The company, which conducted an online survey of US streaming subscribers Sept. 5-24, found that about 23% of them would choose the cheaper Disney+. About 46 million of the 164 million Disney+ subscribers worldwide live in the United States. Starting Thursday, the price of Disney+ as a standalone will increase to $10.99 per month, as the new ad-supported plan starts at $7.99. Prices for both Disney+, Hulu and ESPN+ continue to be reduced by the Disney bundle.

Disney executives said they believe the new version of Disney+ will allow them to attract new subscribers, who may be more price-conscious, and keep existing customers on the phone. The decision to move into streaming was made when Bob Chapek was CEO and his chief lieutenant, Kareem Daniel, oversaw the streaming strategy. Both were ousted last month and former CEO Bob Iger returned to run the company, with higher streaming profits high on his priority list. Netflix took a similar step last month, launching its own ad-supported version for $7 a month. Netflix executives have been adamant that they don’t expect any significant number of subscribers to trade in their cheaper tier. (Kantar’s research found a similar percentage for Netflix subscribers as Disney.)

Kantar data for the third quarter ended September 30 showed that Disney+ was once again over-indexed on “stacked” streaming viewers, meaning those who subscribe to multiple outlets. During the quarter, Kantar noted that Disney’s churn rate, or the percentage of subscribers who unsubscribed, fell to 6% from 9% in the previous quarter. If the cheaper ad-supported plan had been available, the 23% of subscribers who said they traded up for it would have lowered their overall churn rate even more.

The move to streaming ads could open up Disney+ to new viewers and subscribers it might not have attracted when it launched in November 2019. Dancing with the stars and non-franchise fare like Peter Jackson’s multi-part Beatles documentary come back. The Kantar survey found that among viewers who regularly watch ad-supported video-on-demand (AVOD) programming, Disney+ accounts for 8% of total screen time. Another potential advantage for Disney is that AVOD viewers are slightly younger than the average streamer, and also tend to have young families.

The growth in the streaming world favors offers that combine ad-free and AVOD or even free ad-supported (FAST) options. Of Netflix’s recent multibillion-dollar challengers, only Apple TV+ remains limited to an ad-free subscription, and after three years on the market, the tech giant recently delivered a steep price hike.