Disney+ to Raise Prices This Year; How Much More Will You Pay? Will Both Tiers be Affected?
Disney+ to Raise Prices This Year; How Much More Will You Pay? Will Both Tiers be Affected?
The relative news calmness that had settled in for Disney+ over the past few weeks was shattered on Wednesday when Disney released its quarterly earnings report. During the conference call to discuss the results, CEO Bob Iger gave a good amount of detail about the future of streaming for the company.
Along with plans to provide access to Disney+ and Hulu in a single app, Iger revealed that the company was planning to raise prices for Disney+ once again, after previously doing so in December 2022. Disney was seeing its combination of higher prices with an ad-supported offering prove successful in terms of reducing its quarterly streaming losses, and it apparently wants to double down on that strategy.
“The pricing changes we’ve already implemented have proven successful, and we plan to set a higher price our ad-free tier later this year to better reflect the value of our content offerings,” Iger said. “As we look to the future, we will continue optimizing our pricing model to reward loyalty and reduce churn, to increase subscriber revenue for the premium ad-free tier and drive growth of subscribers who opt for the lower cost ad-supported option.”
There was no official comment on how much Disney+ planned to increase the monthly rate of its ad-free tier, but there is enough information on-hand to make an educated guess. When the streamer last raised its prices, its ad-free tier jumped from $7.99 per month to $10.99. When HBO Max executed its latest price increase on its ad-free tier, it rose from $14.99 to $15.99 per month, showing that its parent company Warner Bros. Discovery felt that was the biggest increase customers who were already paying one of the highest subscription rates on the market would be willing to stomach.
Given that information, it’s likely that the ad-free tier of Disney+ will increase to somewhere between $13-$15 per month. Users of the ad-free Disney Bundle will also probably see their rate go up. The Bundle that offers ad-free Hulu and Disney+, along with ad-supported ESPN+, was the only version that did not see its price increase in December, remaining steady at $19.99 per month. Given that, by themselves, ad-free Disney+, Hulu, and ESPN+ with ads cost over $35, it would be shocking not to see that bundle rise in price when ad-free Disney+ does.
Disney is likely counting on the fact that its last price increase did not lead to a large cancelation rate. In fact, 94% of customers of the ad-free streaming tier of Disney+ decided to keep the service when its price went up. This is largely due to the quality of content, as well as the numerous, highly desirable brands exclusive to Disney+, including Marvel and Star Wars. Marvel draws in more streaming viewers than any other franchise, so there’s a good possibility that Disney won’t see dramatically increased churn when it does raise prices.
The good news for users who don’t want to pay more for their Disney+ service this year is that the ad-supported tier is still available. Iger specifically mentioned the ad-free tier as the plan ripe for a price hike, so ad-supported customers can breathe a sigh of relief for now. Disney+ Basic (the company’s name for its plan with ads) costs $7.99 per month, and keeps ad loads at around four minutes per hour of streaming.
As has been seen across the streaming landscape, for Disney+, the ad-supported tier is actually the one that generates the most revenue for the company. Iger noted that one of the goals of the proposed ad-free plan price hike would be to drive customers to the ad-supported option, where Disney can make money on both subscriptions and commercials.
“We’ve got to widen the delta between the ad-free service and the non-ad-supported service because we clearly would like to drive more subs to the ad-supported service,” he said, “because the ARPU [average revenue per user] potential of the ad service Disney+.”
Price jumps are a bummer, but for years, Disney was selling its ad-free streaming service for well below market value in order to drive subscriber growth. The bill for that strategy has now come due for customers, and the company will not be shy about spreading the costs around in order to climb out of its streaming hole.
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.”