Photo Credit: Disney+
The streaming service Disney+ announced an increase in subscription rates, eliciting a range of reactions from its subscribers. Subscribers should pay more unless they are willing to watch ads that appear regularly.
Consumers currently pay $7.99 per month for the streaming service without advertisements. However, under Disney+’s new ad-supported membership tier, the $7.99 price point will now be the tier that includes advertisements.
Subscribers who do not want ads obstructing their leisure time watching shows on Disney+ will have to pay three dollars more, as the new offer without ads will cost $10.99. This would be the biggest increase made by the streaming service since its launch in November 2019. The previous largest increase made by Disney+ was in March 2021, when it hiked its subscription price by one dollar.
During the most recent quarter, Disney+ exceeded expectations from Wall Street analysts by enticing over 14.4 million individuals to subscribe to its services. Disney+ now has 152.1 million subscribers with this new addition. The positive news immediately increased Disney+ shares by 6.5%.
Recent records show Disney besting its competitors
During the second quarter, Disney generated an overall $21.5 billion in revenue from Disney+. This figure is 26% larger than the company’s confirmed income for the second quarter of last year. Net profit was $1.4 billion, a 53% increase over the previous year.
Disney noted that the total number of members to all of its streaming services had risen to 221 million, topping Netflix’s record of 220.6 million users.
With this new information, Disney has brought up their long-term anticipations. By 2024, the streaming giant would have 260 million subscribers, up from its earlier estimate of 230 million. In addition, the forecast for Disney+ products has increased from 135 million to 165 million, while the forecast for Disney+ Hotstar in India has increased by 80 million.
Bob Chapek, the CEO of Disney, said, “We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership, and significant subscriber growth at our streaming services.”
The reason for the increase
Aside from Disney+, various Disney services have increased their rates. For instance, the tiers of Hulu, which Disney controls in large part, changed. While the Hulu membership without commercials has increased by $2 to $14.99, the ad-free subscription plan has increased by only $1 to $7.99.
The Disney Bundle, on the other hand, does not see a price increase. Instead, the price remains unchanged at $19.99. The bundle includes a Hulu subscription, Disney+, and ESPN+, all of which are commercial-free. According to analysts, Disney may use this technique to force consumers to choose the bundle rather than a specific streaming service.
Disney has just launched two new bundle plans in addition to its existing offers: the first is a $9.99 offer that includes Disney+ and Hulu with ads, and the second is a $12.99 bundle that includes all three channels with ads.
Recently, media companies have made it popular to bundle multiple channels in a single offer. For example, Warner Bros. announced a bundle combining HBO Max and Discovery+.
With this new trend, the streaming industry may be entering a new phase, transitioning from the “Streaming Wars” that began in 2017 to the “Rumble of the Bundles” in late 2022.
What streaming companies have to do to survive
As competition grows, it is becoming increasingly difficult for streaming platforms to attract new customers. For a long time, the number of subscribers may remain stable at a certain level. This means that businesses must find new methods for generating revenue.
Price increases are the simplest and most practical way for streaming services to increase revenue.
Disney would “be providing greater consumer choice at a variety of price points to cater to the diverse needs of our viewers and appeal to an even broader audience,” said the chairman of the media and entertainment distribution of Disney.