CEO Bob Iger announced on Disney’s Q2 earnings call (opens in new tab) on Wednesday that the company plans to increase the price of its ad-free plan (currently $10.99/month), to create a wider "delta" between that and the price of its Disney Plus with ads service ($7.99/month).
But, the media giant says that the price rise, due later this year, comes with "added value" for subscribers who will now get added Hulu content (similar to the Disney Plus experience in countries outside the U.S.) The combined Hulu (opens in new tab) and Disney Plus (opens in new tab) content will be available in a new "one-app experience."
Iger said on the earnings call: “While we continue to offer Disney Plus, Hulu, and ESPN Plus (opens in new tab) as standalone options, this is a logical progression of our DTC (direct-to-consumer) offerings that will provide greater opportunities for advertisers while giving bundle subscribers access to more robust and streamlined content, resulting in greater audience engagement and ultimately leading to a more unified streaming experience.”
The decision to hike Disney Plus prices again comes after previous price changes have failed to dampen subscriber appetites, and Iger adds: “We plan to set a higher price for our ad-free tier later this year to better reflect the value of our content offerings.”
Disney’s streaming business already lost four million subscribers globally compared to the last quarter of 157.8 million and they made a loss of $659 (a bigger loss was expected). Iger described those losses as “relatively small” and suggested that it pointed to the streamer's "price elasticity."
At this stage, all we know is that Disney Plus is hiking the price of its $10.99 plan without ads, but they have not announced how much it will be.
We expect all plans to rise in price at some point, as all tiers will benefit from the added value of Hulu's general entertainment shows, documentaries and originals.
Disney has already increased the price of Disney Plus and Hulu subscriptions separately after introducing the ad-supported tier ($7.99/month), which is yet to launch in Europe. This tier competes with other streaming giants' ad-supported options from Paramount Plus (opens in new tab) to Pluto TV (opens in new tab) and, Netflix's recent move into the field.
The move to combine more content under one app service is not new. Disney is following in the slipstream of Warner Bros. Discovery, who just announced the launch of its new app, Max, which combines the content libraries of HBO Max and Discovery Plus into one and is set to launch this month.
Iger said the streamer aims to roll out the combined Disney Plus and Hulu app by the end of the calendar year and more details are due “in the future.”
There is still uncertainty about what happens to Hulu. Comcast owns 33% of the streamer and while there's an agreement in place for Comcast to sell its stake to Disney, in January 2024, Disney is still mulling this over. When the deal was made, it was agreed that Hulu would have a minimum valuation of $27 billion, making Comcast’s stake worth at least $9 billion. This move seems to make Hulu more valuable to Disney. But Iger won't be drawn and last month he told CNBC (opens in new tab) that “everything is on the table.” So watch this space.
Vaishali graduated in journalism from Leeds University, UK. She has worked for her local news outlet, the Leicester Mercury as well as writing personal finance stories for digital publications, The Money Edit, MoneyWeek and GoodToKnow. When she is not writing about money-saving, deals, finance hacks and other personal finance topics, Vaishali likes to travel and she's a foodie.
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