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Disney Increases Prices on Streaming Services to Boost Profitability
Disney is set to increase prices on most of its streaming services as part of a strategy to enhance business profitability. This move will affect the cost of Disney+ and Hulu, with the new prices coming into effect soon.
Disney+ Price Hike and Market Expansion
Starting September 6, the monthly subscription cost for commercial-free Disney+ will rise by 27% to $13.99. However, the price of Disney+ with ads will remain unchanged at $7.99 per month. Furthermore, Disney plans to extend its ad-tier offerings to selected markets in Europe and Canada from November 1.
Comparison with Other Streaming Services
In comparison, Netflix's standard plan without commercials costs $15.49 per month while Warner Bros. Discovery's Max is priced at $15.99 per month. The decision to price Disney+ almost at par with Netflix and Max, and to charge even more for Hulu, indicates Disney's confidence in the competitiveness of its content library.
Hulu's Pricing and Disney's Pricing Strategy
Disney is also raising the price of Hulu without ads by 20% to $17.99 per month. The price of Hulu with ads will remain at $7.99 per month. When Disney CEO Bob Iger launched Disney+ in 2019, he intentionally set the price at a competitive $6.99 per month, nearly half the price of Netflix.
Response to Previous Price Increase
Last year, Disney raised the cost of Disney+ by $3 per month. During the company's May quarterly earnings conference call, Iger expressed surprise at the minimal cancellations following the price increase. "We were pleasantly surprised that the loss of subs, due to what was a substantial increase in pricing for the non-ad-supported Disney+ product, was de minimis," Iger said. "It was some loss, but it was relatively small. That leads us to believe that we, in fact, have pricing elasticity."
Future Expectations and Bundle Pricing
Disney is now wagering that consumers will be willing to pay more for its streaming services, despite potential content disruptions due to Hollywood writers and actors strikes. For consumers interested in both Disney+ and Hulu without commercials, a new "premium duo" offering is available at $19.99 per month, a savings of $12 per month. The price of the Disney+ and Hulu bundle with ads will remain at $9.99 per month.
Increased Bundle Pricing and Subscriber Growth
Disney also increased the price of its bundle of Disney+ (no ads), Hulu (no ads), and ESPN+ (with ads) to $24.99 per month, up from $19.99 per month. The bundle of all three products with commercials will now cost $14.99 per month, a $2 increase. Despite a $512 million loss in its streaming division in the fiscal third quarter, Disney+ added 800,000 subscribers, excluding India's Hotstar. Disney+ ended the quarter with 105.7 million subscribers, excluding Hotstar, and about 146 million in total.
Price Hike for Hulu + Live TV
Disney is also raising the price of Hulu + Live TV with ads to $76.99 per month, up from $69.99. The commercial-free Hulu + Live TV will increase to $89.99 per month from $82.99. As Disney navigates these challenging times, the company's leadership, under Bob Iger, will be crucial in steering the course.
Conclusion: The Impact of Disney's Pricing Strategy on New Businesses
Disney's decision to increase the prices of its streaming services could have significant implications for new businesses in the streaming industry. This move sets a new benchmark in terms of pricing, potentially influencing consumer expectations and market trends.
Challenges and Opportunities
For new businesses, this development could pose a challenge. They may have to reconsider their pricing strategies to remain competitive. On the other hand, this could also present an opportunity. If new businesses can offer quality content at more affordable prices, they could attract customers seeking more cost-effective alternatives to Disney's services.
Adapting to Market Trends
In the dynamic streaming industry, the ability to adapt to market trends is crucial. New businesses should closely monitor these developments and adjust their strategies accordingly. They could consider offering competitive bundle pricing or exploring ad-supported models to generate revenue.
Navigating the Future
In conclusion, while Disney's pricing strategy could reshape the streaming industry, it also presents opportunities for new businesses to innovate and differentiate themselves. As the industry continues to evolve, new businesses that can adapt and offer value to customers are likely to thrive.
Article First Published at: https://www.cnbc.com/2023/08/09/disney-to-raise-disney-price-for-ad-free-plan-in-september.html
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