In an effort to enhance the profitability of its streaming services, Disney has announced a comprehensive price adjustment across its platforms. Starting October 12th, the ad-free subscription of Disney+ will see a 27% surge, bringing the monthly cost to $13.99. However, the ad-supported version of Disney+ will continue to be priced at $7.99 per month. Furthermore, Disney’s strategy includes extending the availability of its ad-supported tier to specific markets in Europe and Canada, commencing from November 1st. These strategic moves align with Disney’s overarching goal of optimizing its streaming business for increased success and reach.
The cost of an ad-free Hulu subscription is set to rise by 20%, reaching $17.99 per month, while the price for Hulu’s ad-supported option will remain unchanged at $7.99 per month. To provide context, Netflix charges $15.49 per month for its standard plan without ads, and Warner Bros. Discovery’s Max subscription stands at $15.99 per month.
By pricing Disney+ at a level comparable to ad-free Netflix and Max subscriptions, and implementing a higher fee for Hulu, Disney is expressing its confidence in the competitiveness of its content collection against these platforms. Back in 2019, Disney’s CEO Bob Iger deliberately positioned Disney+ as a family-oriented option at the affordable rate of $6.99 per month, which was nearly half the cost of Netflix, strategically targeting a specific market niche.
In the previous year, Disney raised the monthly fee for Disney+ by $3. CEO Iger admitted his surprise at the minimal service cancellations resulting from this price adjustment. During Disney’s recent earnings call on Wednesday, he mentioned, “We implemented a noteworthy price increase for Disney+ in late 2022, and we were pleasantly surprised by the limited churn or subscription losses that ensued.”
Iger highlighted Disney’s intentional strategy to encourage users towards its ad-supported services by maintaining consistent pricing for those offerings. According to Iger, the advertising environment within the streaming industry is more robust than that of traditional linear TV. During the call, he revealed that since its December launch, Disney has gained an additional 3.3 million subscribers for its U.S. advertising-supported service. Additionally, he noted that approximately 40% of the new Disney+ subscribers have opted for the ad-supported tier.
Amidst the looming challenges posed by potential Hollywood writers’ and actors’ strikes that could disrupt its content pipeline in the upcoming months, Disney is making a wager that consumers will still be willing to invest more in its streaming services.
For those seeking both Disney+ and ad-free Hulu, a new “premium duo” option will be introduced at a cost of $19.99 per month, presenting a savings of $12 per month. This offering will be accessible starting from September 6. The joint Disney+ and Hulu bundle featuring ads will retain its price of $9.99 per month. Meanwhile, Disney has also raised the pricing of its package consisting of Disney+ (ad-free), Hulu (ad-free), and ESPN+ (with ads) to $24.99 per month, up from the previous $19.99 per month. The bundled package encompassing all three services with commercials will be priced at $14.99 per month, marking a $2 monthly increase.
In its fiscal third quarter update, Disney revealed that its streaming sector experienced a loss of $512 million. Excluding India’s Hotstar, Disney+ saw a growth of 800,000 subscribers during this period. The total number of Disney+ subscribers reached 105.7 million, excluding Hotstar, and approximately 146 million when including all platforms. Moreover, Disney has decided to implement price adjustments for Hulu + Live TV with ads, raising it to $76.99 from $69.99 per month. Additionally, the ad-free version of Hulu + Live TV will see a price increase to $89.99 per month, up from $82.99 per month.