Disney Implements Price Hike for US Streaming, Anticipates $4 Monthly Increase in UK

disney-implements-price-hike-for-us-streaming-anticipates-3-monthly-increase-in-uk

Disney is increasing the cost of its streaming services and expanding a version that transmits advertisements to new markets, including the United Kingdom.

The monthly cost of ad-free Disney+ in the United States will increase by $3 to nearly $14, while ad-free Hulu will increase by 20% to $18.

Beginning November 1st, the base subscription costing £7.99 per month in the United Kingdom will become a “premium” subscription costing £10.99 per month. The company will also release a variant with advertisements for £4.99 per month. Not available in the United Kingdom.

Bob Iger, the chief executive officer of Disney, pledged on Wednesday to make the entertainment and media conglomerate’s streaming products profitable while announcing price adjustments and a crackdown on password sharing. The move mirrors a similar strategy employed by Netflix, the dominant player in the market, which has responded to stalling growth by introducing an ad-supported tier and modifying password policies.

In its third-quarter financial results released on Wednesday, Disney reported narrower losses on its Disney+ streaming platform. Disney+, whose successes include Star Wars spin-off The Mandalorian and chef drama The Bear, has 146 million global subscribers, compared to 238 million for Netflix.

Due to its India division losing the rights to the Indian Premier League cricket competition, the number of Disney+ subscribers decreased by 7% from the previous quarter.

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Disney’s Cost-Saving Overhaul: Streaming Division Faces Rising Production Costs

disney-implements-price-hike-for-us-streaming-anticipates-3-monthly-increase-in-uk
Disney is increasing the cost of its streaming services and expanding a version that transmits advertisements to new markets, including the United Kingdom.

Disney is in the midst of a “strategic reorganization” designed to save the company $5.5 billion. The streaming operations division reported a narrower $500 million loss, but admitted that production costs had increased.

Disney reported a 4% increase in quarterly revenue, but shifted to a net loss of $460 million from a profit of $1.4 billion a year earlier.

While the company reported smaller quarterly losses for Disney+, the service lost subscribers in the United States and Canada for the second consecutive quarter.

Iger stated that the price increases were intended to steer consumers toward the inexpensive ad-supported variants of these services, whose subscription prices are not changing – $7.99 per month in the United States. He noted that the advertising market for streaming was “picking up” and that it was healthier than the market for traditional TV advertisements. “We’re obviously trying with our pricing strategy to migrate more subs to the advertising supported tier.”

Iger did not explain on the password-sharing crackdown beyond the statement that Disney could reap some benefits in 2024, though he added that the work “might not be completed” by then and that Disney could not predict how many password-sharing users would convert to paid subscriptions.

Some analysts doubted that increasing prices and clamping down on password-sharing would be sufficient to restore Disney’s growth to a sustainable level.

Paul Verna, an analyst with Insider Intelligence, stated that the company’s actions were unlikely to reassure investors “anxious for clarity on the company’s strategy for its streaming services and TV networks”.

While a reduction in Disney’s streaming losses is encouraging, he argued that the improvements were due more to drastic cost-cutting than to organic growth, indicating that Iger still lacks a strategy for putting Disney on solid ground.

Disney also owns a theme park operation, the ABC and ESPN television networks, and a sizable Hollywood division that includes the Disney and 20th Century Fox studios.

 

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Source: The Guardian

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