Disney is hiking the price of its ad-free Disney+ subscription to $13.99 per month and plans to launch a premium duo that includes Hulu without commercials for $19.99.
The price hike represents a 27 percent jump from the current $10.99 cost and it will come into effect on October 12.
Disney is also increasing the price of Hulu without ads to $17.99 per month which is 20 percent more than the current $14.99 deal.
But it is offering a $12 a month saving for those who want both subscriptions with a new $19.99 joint offering.
It comes after Disney CEO Bob Iger vowed to crack down on password sharing as the company seeks to boost profits following the release of its third quarter financial results.
Disney will raise the price of ad-free Disney+ subscription to $13.99 per month and plans to launch premium duo with Hulu without commercials for $19.99. Pictured: CEO Bob Iger
The price hike represents a 27 percent jump from the current $10.99 cost and it will come into effect on October 12
It comes after Disney CEO Bob Iger vowed to crack down on password sharing as the company seeks to accelerate profitability
Netflix’s standard plan without ads is priced at $15.49 per month and Warner Bros. Discovery’s Max is $15.99.
Disney’s decision to increase its Disney+ price to a similar level and charge more than its competitors for Hulu shows the company thinks its content can compete.
The company has also increased the price of its trio bundle of Disney+, with no commercials, ad-free Hulu and ESPN+ with ads to $24.99 per month from $19.99 per month.
The same bundle with commercials will rise by $2 to $14.99 per month.
While the cost of Hulu + Live TV with adverts will increase to $76.99 from $69.99 per month and the ad-free service will jump to $89.99 per month from $82.99 per month.
Disney+ was launched in 2019 at the deliberate low price of $6.99. The company increased the cost by $3 per month last year.
At the time CEO Iger said: ‘We were pleasantly surprised that the loss of subs, due to what was a substantial increase in pricing for the non-ad-supported Disney+ product, was de minimis.
‘It was some loss, but it was relatively small. That leads us to believe that we, in fact, have pricing elasticity.’
Disney chief Igor has also revealed that the company is now prioritizing ways to turn those using other people’s accounts into paying customers.
‘We are actively exploring ways to address account sharing and the best options for paying subscribers to share their accounts with friends and family,’ he said during a call on Disney’s quarterly earnings on Wednesday.
Disney+ was launched in 2019 at the deliberate low price of $6.99. The company increased the cost by $3 per month last year and was surprised to see it led to minimal cancellations
Disney is increasing cost of Hulu without ads to $17.99 per month which is a 20 percent increase. But it is offering a $12 a month saving with Disney + with a new $19.99 joint offering
Disney chief Igor has revealed the company is prioritizing ways to turn those using other people’s accounts into paying customers
‘Later this year, we will begin to update our subscriber agreements with additional terms on our sharing policies, and we will roll out tactics to drive monetization sometime in 2024.’
Disney’s subscriber agreements for Disney+, ESPN+ and Hulu currently state that customers can’t ‘share your login credentials with third parties’.
But it does not specify whether users are allowed to share passwords with friends and family members from different households.
When asked how widespread the issue was on Disney streaming services, Igor said: ‘I’m not going to give you a specific number, except to say that it’s significant.
‘What we don’t know, of course, is as we get to work on this, how much of the password sharing as we basically eliminate it will convert to growth in subs. Obviously, we believe there will be some, but we’re not speculating.
‘What we are saying, though, is that in calendar ’24, we’re going to get at this issue.
‘And so while it is likely you’ll see some impact in calendar ’24, it’s possible that we won’t be complete or the work will not be completed within the calendar year.
‘But we certainly have established this as a real priority. And we actually think that there’s an opportunity here to help us grow our business.’
Disney’s financial results for the third quarter on Wednesday.
It exceeded Wall Street’s estimates on adjusted per-share earnings and the company said it was on track to cut costs by more than the $5.5 billion it promised investors in February.
But the company missed Wall Street targets for revenue and fell slightly behind expectations on U.S. subscribers of Disney+, though it has significantly trimmed its losses.
It is coping with an eroding television business and a movie box office that has yet to return to pre-COVID levels.
Disney said it cut losses at its streaming video services to $512 million in its fiscal third quarter, narrower than its loss of about $1.1 billion a year ago.
It added 800,000 Disney+ subscribers, 100,000 subscribers shy of analyst estimates, and shed 12.5 million subscribers to the Disney Hotstar service in India, or nearly a quarter of its subscribers, as it gave up rights to Indian Premiere League cricket matches.
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Disney reported revenue of $22.33 billion for the quarter ended July 1, up four percent from a year ago but short of the Wall Street average estimate of $22.5 billion, according to Refinitiv data.
It delivered per-share earnings of $1.03, when excluding certain items, beating Wall Street projections of 95 cents a share.
It was not immediately clear if the adjusted profit figures were comparably calculated.
The company took $2.65 billion in impairment and restructuring charges in the quarter, reflecting the cost of removing some content from its streaming services, terminating licensing agreements and $210 million in severance payments to laid-off workers.
Disney’s traditional television business continued its decline, with lower revenue and operating income across the company’s broadcast and cable TV business.
Higher sports programming production costs, together with lower affiliate revenue, dragged down the performance of its cable channels.
TV revenue for the quarter decreased seven percent to $6.7 billion, while operating income fell 23 percent to $1.9 billion.
Disney’s direct-to-consumer business reported a nine percent increase in revenue to $5.5 billion, as the average revenue per subscriber rose at Disney+ and Hulu.
Content sales and licensing, the unit that includes film and television sales, reported a deeper operating loss of $243 million in the quarter, compared with a loss of $27 million a year ago.
Disney’s Parks, Experiences and Products group reported a 13 percent increase in revenue in the quarter to $8.3 billion, and an 11 percent bump in operating income to $2.4 billion.