Disney says price hikes for streaming services are 'natural'
Disney's video streaming service, Disney+, is trying to increase revenue by introducing
Disney has “earned” latest streaming price hike, CFO says | Ars Technica
https://arstechnica.com/gadgets/2024/08/disney-has-earned-latest-streaming-price-hike-cfo-says/
Walt Disney (DIS) Q3 2024 Earnings Call Transcript | The Motley Fool
https://www.fool.com/earnings/call-transcripts/2024/08/07/walt-disney-dis-q3-2024-earnings-call-transcript/
Disney+ announced a new plan with ads in December 2022 and a price increase for the existing plan at the same time. It then implemented a price increase in August 2023.
In addition, Disney announced that it will further increase the prices of its streaming services, including Disney+, Hulu, and ESPN+, on August 7, 2024 (local time). This price increase will result in a price increase of up to 25% depending on the plan. The prices of each service at the time of writing and the new prices after October 17, 2024 are as follows.
Disney with ads: $8 (about 1,170 yen) to $10 (about 1,460 yen) per month
・Disney without ads: $14 (about 2,040 yen) to $16 (about 2,330 yen) per month
・Hulu with ads: $8 to $10 per month
・ Hulu without ads: $18 (about 2,620 yen) to $19 (about 2,780 yen) per month
・ESPN+: $11/month (about 1610 yen) → $12/month (about 1750 yen)
Disney also announced that its streaming business has turned a profit for the first time. According to Disney's financial report for the third quarter of 2024 (April to June), the streaming business had an operating profit of $47 million (6.87 billion yen). In the same period last year, Disney's streaming business posted a loss of $512 million (about 74.8 billion yen).
When asked why Disney is planning to raise prices even though it has turned a profit, CFO Hugh Johnston said, 'We feel we are well positioned in the market to support our new pricing (price increases), and with that comes economies of scale. Our improved product should reduce customer churn and help us retain consumers who are considering their options.' He added that Disney is providing a streaming service that is worth the new pricing.
At the time of writing, Disney is not satisfied with the profitability of its streaming business and has promised investors that it will soon increase the profit margin of the business to double digits. Ars Technica, a foreign media company, said, 'From a broader perspective, Disney also faces the challenge of maintaining the company's success amid a decline in the television industry and pressure on other old business areas such as theme parks,' and pointed out that the streaming business must be the driving force behind it.
One of the biggest business challenges facing streaming services is the high cancellation rate of users. As streaming services have repeatedly increased their prices, more and more users are canceling their subscriptions after watching their favorite content until the service adds new content.
However, Disney CEO Bob Iger said that by establishing new live channels and expanding movie content, 'we have increased the pricing power of our streaming services.' In addition, in response to customer backlash against recent price hikes in streaming services, Iger said, 'We're not worried. Our goal is to increase engagement on the platform, which means offering a wider variety of programming. We believe that the number of cancellations caused by our price hikes will be small and not material.'
In addition, CEO Iger claims that there has been 'no significant backlash' to the crackdown on account sharing that began in June 2024.
Disney+ to start cracking down on account sharing - GIGAZINE
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