Disney's ad tier officially launched Thursday as the media giant looks to curb accelerating streaming losses.

"We expect Disney to generate anywhere from about $500 million to even up to $1 billion dollars in ad-supported revenue on the Disney+ product in their first year of operation," Geetha Rangathan, analyst at Bloomberg Intelligence, told Yahoo Finance Live.

Rangathan said ad-supported revenue rise by up to $3 billion over the next three years, reiterating her confidence in the media giant amid its early streaming success.

"This is a company that has added about 40 million to 45 million subscribers year after year on their Disney+ product— that's just some staggering growth, and it's expected to grow even further with this new ad supported tier."

Revenue within Disney's direct-to-consumer division has grown over the years amid the jump in subscribers. For full-year 2020, DTC revenue came in at $10.55 billion before surging to $16.32 billion in 2021 and $19.56 billion in 2022. Advertising revenue for Disney's DTC unit rose from $2.36 billion in 2020 to $3.73 billion in 2022.

The new offering — which comes one month after Netflix's (NFLX) much-anticipated ad-supported debut — costs $7.99 per month, $3 less than the ad-free version of Disney+ which now costs $10.99 per month.

The ad load will be conservative at first, roughly 4 minutes of ads per hour or less, according to the company. That's about half of Hulu's 8 minute-per-hour ad load and even less compared to linear television's 15 minute-per-hour standard.

Disney added, at least for now, there will be no commercials featuring alcohol or competitor content, as well as no political ads.

According to a new study by Kantar Research, about 1 in 4 current Disney+ subscribers will trade down to the ad-supported version — translating to roughly 46 million of the streamer's total 164 million user base.

Rangathan, meanwhile, suggested anywhere from 20% to 30% of the U.S. subscriber base could trade down, although that number could edge higher given the success of Hulu's ad tier.

"Almost 70% to 75% of Hulu's subscriber base is on the ad-supported version, so ads have been a huge hit with Hulu," the analyst said. "I think it's going to be a little bit different with Disney+, but we can expect to see at least a third of the user base convert to that ad-supported product over time."

Industry experts argue offering lower-cost, ad-supported options are still an important hedge against churn — something all streamers want to avoid amid increased competition.