After Success of Latest Price Increase, When Can Disney+ Users Expect Another?
After Success of Latest Price Increase, When Can Disney+ Users Expect Another?
The data for Disney+’s launch of an ad-supported tier continues to look promising for the company. New users are choosing that plan at more than double the rate that was seen when Netflix introduced its ad-supported price tier according to a recent survey.
A new report from the Wall Street Journal shows that the ad-free Disney+ tier is also doing well. A full 94% of the streamer’s users decided to stick with that plan when the company increased subscription prices in December to coincide with the launch of the ad-supported tier. That’s despite a 38% jump in cost from $7.99 per month to $10.99.
Normally, streaming services space out price increases by a year or two at least, to avoid giving users sticker shock. But Disney isn’t most companies in this instance; its streaming segment has lost $10 billion since the launch of Disney+ in 2019, and the deficits are still piling up. The company needs to take drastic action in its pivot toward profitability for its streamers and CEO Bob Iger hinted at the Morgan Stanley Technology, Media and Telecom conference that more price hikes were a strategy Disney could pursue.
“In our zeal to grow global [subscriptions], I think we were off in terms of that pricing strategy, and we’re now starting to learn more about it and to adjust accordingly,” Iger said. “We have a lot of rationalization to do from a pricing perspective, but that’s one path to profitability.”
So when could Disney+ raise prices next? It could depend on what Disney decides to do with Hulu. The company wants to pull back on its general entertainment offerings, and the sale of its two-thirds ownership stake in Hulu is a potential option. But it could still decide to buy the remaining third of that service from Comcast before the end of 2024, and if it does it would have ample justification for bumping the price of Disney+ again.
If Disney decides to raise subscription costs for Disney+, what could that look like in terms of actual dollars? If the company follows the strategy of other streaming services that have announced price increases recently, it will raise the cost of its ad-free tier first. Paramount+ recently announced a $2 price increase for its ad-free plan, which will be integrating all SHOWTIME content soon. The ad-supported plan will be seeing a $1 increase, as well.
Disney+ will likely follow a similar strategy if it does raise prices in the near future. A $1-$2 increase for its ad-supported plan, and a $3-$4 jump for its ad-free tier seem most likely. That would put ad-free Disney+ at $14-$15 per month, still less than HBO Max’s ad-free offering ($15.99 per month), and Netflix’s commercial-free Standard plan ($15.49 per month).
There are other options on the table besides raising prices again for the House of Mouse. The sale of Hulu would bring a quick infusion of cash to Disney, and it has already confirmed it is seeking to license more shows to other outlets and extend theatrical release windows to try to raise its revenue intake company-wide.
All of this, of course, is conjecture for now. But Disney has a lot of catching up to do in the race toward streaming profitability, and it will likely have to pursue multiple strategies at once to cut direct-to-consumer costs and raise revenues. One of those strategies could well be another price increase for Disney+ sometime before the end of 2024.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”