The streaming wars are all about strategy and pricing power is a major emphasis of The Walt Disney Company’s third-quarter earnings report Wednesday.
Disney+’s long-awaited ad-supported streaming tier will launch on December 8 at a price of $7.99 per month, the same price that Disney+ customers are already paying. The cost of the premium, ad-free tier has risen to $3.99 to $10.99 per monthly. Hulu is raising its prices too. Its ad-supported Tier increases by $1 to $7.99 per Month and its Ad-Free Tier hikes by $2 to $14.99 Per Month. This way, ad-free Disney+ subscribers can’t cancel for a cheaper alternative.
“We continue to transform entertainment as we near our second century, with compelling new storytelling across our many platforms and unique immersive physical experiences that exceed guest expectations, all of which are reflected in our strong operating results this quarter,”In a statement, Bob Chapek, Disney CEO, stated.
This is the largest price increase for Disney+ since its launch in November 2019. The company previously raised the streamer’s prices by $1 in March 2021. However, the Disney Bundle — which includes ad-free tiers of Disney+ and Hulu as well as ESPN+ — will remain $19.99.
Disney has also introduced new bundle plans to accommodate these changes. The first bundle is an ad supported combination of Disney+ & Hulu at $9.99 per monthly, while the second bundle is an ad supported collection of all three services at $12.99 per per month.
Bundling that is flexible and creative remains a key strategy for offering consumers a broad selection of products that appeal to a range of financial demographics. Warner Bros. Discovery announced last week that it will combine HBO Max, Discovery+ and create one streaming service that is supersized. The service will debut in the U.S. next Summer.
While Disney’s direct-to-consumer revenue in the quarter rose 19% to $5.1 billion, operating loss also increased from $887 million in Q2 to $1.1 billion this quarter. With subscriber growth slowing in the domestic market across all of streaming, flexible bundling and price hikes are a way to attract more paying customers and increase the service’s average revenue per user (ARPU).
Disney+ saw an impressive 14.4million new subscribers in Q3, taking its total worldwide to 152.1 million. Hulu, a non-international service, added 600,000. Its total reached 46.2 million. ESPN+ increased by 500,000 to 22.8 millions. Overall, Disney now boasts 221 million global customers (though bundle subscribers are counted three times), more than Netflix’s 220.7 million paying customers. The company can now flex its pricing power by meeting growing demand.
More to come…