Disney is considering a free version of Disney+ that shows advertisements, according to reports based on comments from Disney's Chief Product and Technology Officer Adam Smith during an internal company meeting. The company has not officially announced this plan.

Smith did not say when this free tier might launch or what it would include — for instance, how many movies and shows would be available, or how many ads viewers would watch. Disney has not confirmed the plan publicly yet.

Business Insider reported that Disney is thinking about this move partly because of YouTube. Nielsen data shows that YouTube leads in total TV watching time compared to other streaming services and traditional television — a surprising shift that has forced major studios to think differently about their competition. YouTube makes money primarily by offering free, ad-supported video, and it reaches a massive audience.

An earlier report from mid-June mentioned Disney executives discussing how to turn Disney+, Hulu, ESPN, and other Disney services into one single app. The new report about a free tier appears to be related to this broader plan.

What a free tier would mean

Right now, Disney+ offers three options in most places: a basic plan with ads, a premium plan without ads, and bundles that include Hulu and ESPN+. A fully free option — separate from just lowering the price of the current ad-supported plan — would be different. It would let anyone sign up without entering a credit card, similar to how free versions of Peacock, Tubi, and Pluto TV work.

The business reason for this move would be to reach more viewers and sell more ads — especially ads shown on television-connected devices like streaming sticks, which are worth more money to advertisers than ads on regular websites. Free access could also encourage some viewers to upgrade to a paid plan later on. Netflix, Max, Peacock, and Amazon Prime Video all added ad-supported options starting in 2022 for the same reason.

Offerning a free tier would also let Disney compete directly with YouTube for people who are willing to watch ads on their televisions. Right now, Disney doesn't control or earn money from that viewing.

It is worth noting that Disney has not confirmed this plan. The comments Smith made sound like thinking out loud during a company meeting, not a final decision. Large companies often discuss new ideas internally that never turn into actual products. Disney took years to decide to add ads to Disney+ at all, and it launched that option in December 2022. Any free tier would likely take a similarly long time to develop.

The real story here is about how YouTube has changed the way Disney thinks about its competition. Ten years ago, Disney worried that Disney+ would take away viewers from its traditional television channels. Now, the bigger worry is losing viewers to YouTube, which has content made by regular people and creators, not just major studios. That shift says a lot about where the streaming industry stands today.

If Disney does launch a free tier, it would add more ads for sale in the television-streaming market, which already has many options — Peacock, Tubi, Pluto TV, and Freevee all offer free ad-supported services. For subscribers, Disney would join other major studios in offering a free entry point to its shows and movies.