Disney increases streaming prices by up to 27% to reduce losses for its services, which amounted to $512 million in the last quarter alone.

Disney increases streaming prices by up to 27% to reduce losses for its services, which amounted to $512 million in the last quarter alone.

Disney+ and Hulu Raise Prices: A Move Towards Profitability

Disney Plus

Introduction

In a bid to bolster its streaming business and turn a profit, Disney announced price increases for its ad-free versions of Disney+ and Hulu. Starting October 12th, the monthly subscription for the ad-free Disney+ service will rise from $11 to $14, while Hulu’s ad-free version will increase by 20% to $181. This move marks the second price increase for Disney+ in less than a year, highlighting the company’s determination to monetize its streaming services2.

The Drive for Profitability

Since its launch in November 2019, Disney+ has attracted a massive subscriber base by offering competitive, low-priced plans. However, these low prices have proven to be unsustainable for the company3. In an effort to narrow its losses and compete with other streaming giants like Netflix and Warner Bros. Discovery, Disney has made the strategic decision to raise prices and drive towards profitability4.

The Streaming Landscape

Netflix, one of Disney’s biggest competitors, currently charges $15.50 per month for its ad-free service. Warner Bros. Discovery also prices its Max service at $165. With the recent price hike, Disney+ at $14 per month remains competitively positioned6. Additionally, Disney reported a significant reduction in streaming losses, with a decrease of half from the previous quarter to $512 million7. This better-than-expected result reflects the positive impact of Disney’s pricing strategy.

Customer Growth and Market Expansion

Despite the price increase, Disney+ continues to retain and attract customers. In the fiscal third quarter, Disney+ witnessed an increase in its core customer base, reaching 105.7 million subscribers compared to 104.9 million from the previous quarter8. These figures do not include the Hotstar service available in Asia9. The consistent growth in customer acquisition indicates a level of satisfaction and loyalty among users.

Moreover, Disney is introducing new pricing tiers and expanding its market presence. A new ad-free version of the Disney-Hulu bundle is now available for $20 per month. Furthermore, the ad-free version of the bundle with Disney+, Hulu, and ESPN+ is increasing to $25 per month10. This provides customers with different choices based on their preferences and budgets.

To further diversify its offerings, Disney plans to launch an ad-supported version of Disney+ in several European markets and in Canada in November11. This expansion aims to attract a wider range of customers while providing options for those who are more comfortable with ads.

Conclusion

Disney’s decision to raise prices for its streaming services is a strategic move towards profitability. The price increases demonstrate Disney’s commitment to balancing financial sustainability with customer satisfaction. Despite the changes, Disney+ continues to experience steady customer growth, indicating the effectiveness of its content and brand appeal. With its expanded market presence and flexible pricing options, Disney is well-positioned to compete in the ever-evolving streaming landscape.


  1. Source: Fortune↩︎

  2. Source: Fortune↩︎

  3. Source: Fortune↩︎

  4. Source: Fortune↩︎

  5. Source: Fortune↩︎

  6. Source: Fortune↩︎

  7. Source: Fortune↩︎

  8. Source: Fortune↩︎

  9. Source: Fortune↩︎

  10. Source: Fortune↩︎

  11. Source: Fortune↩︎