Disney raises prices for streaming services

Disney unveiled a new pricing structure that incorporates an advertising-supported Disney+ as part of an effort to make its streaming business profitable.

Starting Dec. 8 in the U.S., Disney+ with commercials will be $7.99 per month — currently the price of Disney+ without ads. The price of ad-free Disney+ will rise 38% to $10.99 — a $3 per month increase.

The price of Hulu without ads will rise by $2 per month, from $12.99 to $14.99, effective Oct. 10. Hulu with ads will go up by $1 per month, rising from $6.99 to $7.99.

Disney announced last month that ESPN+ with ads would go up 43% to $9.99 per month.

The price increases reflect the growing operating loss for Disney’s streaming services. Disney+, Hulu and ESPN+ combined to lose $1.1 billion in the fiscal third quarter, $300 million more than the average analyst estimate, reflecting the higher cost of content on the services. The increased operating loss occurred even while Disney added about 15 million new Disney+ subscribers in the quarter, about 5 million more than analysts estimated.

Disney has previously stated it plans to lose money on Disney+ until 2024. Chief Financial Officer Christine McCarthy reiterated on Wednesday’s earnings conference call that Disney+’s losses will peak during the company’s fiscal 2022.

Average revenue per user for Disney+ decreased by 5% in the quarter in the U.S. and Canada due to more customers taking cheaper multi-product offerings.

Overall, the company’s quarterly results, also announced Wednesday, beat analysts’ expectations on the top and bottom lines. Disney+ subscriptions rose to 152.1 million during the most recent period, higher than Wall Street’s projections of 147 million.

Counting Disney+, ESPN+ and Hulu (which is partially owned by Comcast), Disney has 221 million streaming subscribers.

Bundled pricing

Source: https://www.cnbc.com/2022/08/10/disney-raises-price-on-ad-free-disney-38percent-as-part-of-new-pricing-structure.html