Disney to boost prices for ad-free Disney+ and Hulu, vows crackdown on password sharing

Bob Iger, the CEO of Walt Disney Co., has committed to achieving profitability for its streaming services. This will be accomplished through a scheduled price increase in October for both the ad-free Disney+ and Hulu plans, along with a stricter approach towards password sharing that is anticipated to continue into the following year. Check More on Sarkari Result

The forthcoming adjustments will result in a $3, or approximately 27%, rise in the monthly subscription fee for ad-free Disney+, bringing it to nearly $14. Similarly, the ad-free Hulu plan will see a $3 increase, bringing the cost to nearly $18. This 20% hike will position it at a higher price point than Netflix’s most popular ad-free tier.

Sign up for Disney+ or Hulu to avoid the upcoming price increase

After Disney released its earnings report for the fiscal third quarter that concluded on July 1, Bob Iger addressed the results. The earnings were a combination of positives and negatives, with the company experiencing a notable net loss and a decline in customer numbers across both domestic and international markets.

In terms of financials, Disney’s revenue for the quarter showed a 4% increase overall. However, there was a significant shift from the previous year’s profit of $1.4 billion to a net loss of $460 million. Despite these fluctuations, Disney’s stock, which had closed at $87.49, saw an approximate 2.2% increase in after-hours trading, reaching $89.45.

While Disney managed to reduce losses on its Disney+ platform during the quarter, the service experienced a decline in domestic subscribers for the second consecutive quarter in both the U.S. and Canada. On an international scale, it faced its third successive quarter of decreased subscribers, with challenges in the Indian market contributing significantly to this decline.

In specific numbers, the third quarter saw the service’s international customer base at 146.1 million, marking a 7.4% reduction from the 157.8 million reported in the second quarter. This followed a loss of 4 million streaming subscribers in the previous quarter. In the domestic market, the service lost 300,000 subscribers in the third quarter, mirroring the same figure from the second quarter.

Acknowledging these challenges, the CEO of Disney, Bob Iger, stated that the price hikes were strategically designed to encourage consumers to opt for the more economical ad-supported versions of these services, whose subscription costs remain unchanged. Iger also noted a positive trend in the advertising market for streaming, describing it as more robust than traditional television ads. He emphasized the intention to transition more subscribers towards the ad-supported tier through the pricing strategy.

While Iger didn’t delve into specifics about the password-sharing crackdown, he did mention the potential benefits that Disney could reap from this initiative in 2024. He did, however, caution that the efforts might extend beyond that year, and the company couldn’t accurately predict the number of password sharers who might switch to paid subscriptions.

Certain analysts expressed skepticism regarding whether the implemented price increases and the efforts to curb password sharing will significantly contribute to Disney’s sustainable growth. Paul Verna, an analyst at Insider Intelligence, shared in a note that these actions may not provide the clarity that investors are seeking about Disney’s strategy for its streaming services and TV networks, leaving them still uncertain.

Verna pointed out that while the reduction in Disney’s streaming losses is a positive development, the improvements seem to stem more from substantial cost-cutting measures rather than organic growth. This perspective suggests that Bob Iger, despite his efforts, hasn’t yet formulated a comprehensive plan to establish a solid foundation for Disney’s operations.

Amidst these challenges, Disney is in the midst of a strategic reorganization that involves a significant reduction of around 7,000 jobs, with the aim of achieving a cost-saving of $5.5 billion across the entire company.

Bob Iger, who took back the CEO position from Bob Chapek in November, has been actively engaged in revitalizing Disney’s streaming business over the past few months. Simultaneously, he’s been diligent in ensuring that the financial stability of the company’s theme parks remains steadfast.