Disney To Boost Prices For Ad-Free Disney+ And Hulu Services And Vows Crackdown On Password Sharing

CEO of Walt Disney Co., Bob Iger, promised to increase prices for its ad-free Disney+ and Hulu plans in October and crack down on password sharing through the end of the following year to make the company’s streaming services profitable.

The price changes will increase the ad-free Disney+ monthly fee by $3, or nearly 27%, to almost $14. In addition, the price of ad-free Hulu will increase by $3 to nearly $18 – a 20% increase, making it more expensive than Netflix’s most popular ad-free tier.

Iger remarked after Disney’s fiscal third quarter, which concluded on July 1, released its mixed numbers. The business recorded a substantial financial loss while losing clients in home and foreign markets. Disney reported an overall 4% gain in revenue for the quarter but switched from a $1.4 billion profit a year earlier to a net loss of $460 million. In after-hours trading, Disney shares, which had ended at $87.49, increased by almost 2.2% to $89.45.

Disney+ experienced narrower losses throughout the quarter but continued to lose domestic subscribers in the United States and Canada. Internationally, it recorded its third consecutive quarter of declines, even though problems in the Indian market were a significant factor.

The service had 157.8 million foreign users in the second quarter, a 7.4% decrease to 146.1 million in the third quarter. That came after a 2nd quarter loss of 4 million streaming users. It lost the same number of domestic subscribers—300,000—in the third quarter as in the second.

The Disney CEO admitted that the price increases are meant to tempt customers away from the subscription-based versions of these services and towards cheaper ad-supported alternatives. He claimed that the streaming advertising business is “picking up,” saying it is more advantageous than conventional TV advertisements. “We’re attempting to migrate more subscribers to the advertising-supported tier with our pricing strategy.”

CEO of Walt Disney Co., Bob Iger, promised to increase prices for its ad-free Disney+ and Hulu plans in October.

Iger said only that Disney might gain from the crackdown on password sharing in 2024, but he noted that the effort “might not be completed” then and that Disney couldn’t forecast how many password sharers would convert to paid subscriptions.

Analysts expressed skepticism about Disney’s ability to return to sustained growth, despite price increases and tougher password-sharing policies. Insider Intelligence analyst Paul Verna noted that investors “anxious for clarity on the company’s strategy for its streaming services and TV networks” are unlikely to be soothed by its actions.

Although a reduction in Disney’s streaming losses is encouraging, the improvements resulted from drastic cost cuts more than organic growth, indicating that Iger still lacks a strategy for placing Disney on a solid financial footing.

To save the corporation $5.5 billion, Disney is amid a “strategic reorganization” that involves letting go of roughly 7,000 employees.

In the past several months, Iger, who returned in November to replace Bob Chapek as CEO, has attempted to turn around Disney’s streaming business while maintaining the financial sturdiness of its theme parks.

CEO of Walt Disney Co., Bob Iger, promised to increase prices for its ad-free Disney+ and Hulu plans in October.

Industry insiders generally agree that Disney’s theme parks are essential to the company’s operations in Burbank, California. Iger has prioritized winning back the brand’s devoted fans by rekindling their love of Disney theme parks. The U.S. parks saw adjustments soon following Iger’s return.

Additionally, he had to fight to stop Florida Governor Ron DeSantis from annexing the Disney World theme park district. Disney filed a lawsuit against DeSantis in late April, alleging that the governor engaged in a “targeted campaign of government retaliation” in response to the company’s opposition to a statute known as “Don’t Say Gay.” This month, a group of primarily Republican former senior government officials referred to the Florida governor’s seizure of Disney World’s administrative district as “severely damaging to the political, social, and economic fabric of the State.”

Iger agreed to a two-year contract extension, allowing the entertainment and theme park giant some time to identify his replacement. Disney announced last month that Iger will continue to serve as CEO of The Walt Disney Co. through the end of 2026.

Tuesday saw the announcement by Disney-owned ESPN that it had successfully negotiated a lucrative deal to rename a current sports betting app operated by Penn Entertainment as ESPN Bet. Penn Entertainment will continue to own and run the betting app and will pay $1.5 billion in addition to other considerations for the exclusive rights to the ESPN name.

SOURCE – (AP)