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According to a statement released by the company on Wednesday, the new Disney+ ad-supported membership tier will launch in the US on December 8 at a price of $7.99 per month. It should appear familiar if that price point does. Consumers currently pay this price for its service without advertising.
The Disney+ premium tier, which does not include advertisements, will now increase by $3 to $10.99 per month, marking the channel’s biggest price hike since its launch in November 2019. In March 2021, it increased pricing by $1.
The price hike for Disney+ coincides with the service’s successful quarter. The service exceeded Wall Street projections by adding 14.4 million customers in the third quarter. 152.1 million people are current subscribers to the service.
After-hours trading results drove share prices up by as much as 6.5%.
In terms of total business profits, Disney (DIS) reported $21.5 billion in sales for the second quarter, up 26% from the prior year, and $1.4 billion in net profit, up 53% from the same period the previous year.
Disney reported having 221 million users of its various streaming services. In addition, 220.6 million people subscribe to Netflix.
230 million to 260 million subscribers were revised from Disney’s long-term projections for the end of the fiscal year 2024. It updated its projection on Wednesday, estimating 135 million to 165 million members for its primary Disney+ offering and up to 80 million for its Disney+ Hotstar service in India.
Why Disney+ is becoming more expensive
Disney’s other streaming services are also increasing in price, not only Disney+. Disney owns a portion of Hulu, which will also see price increases of $1 to $7.99 for its ad-supported tier and $2 to $14.99 for Hulu without advertising.
The premium Disney Bundle, which bundles together the company’s streaming services Disney+ and Hulu with no advertisements, along with ESPN+, is one package that won’t see a price increase. However, the price is still $19.99.
Disney appears to be using this action to encourage customers to join up for all of its services rather than just one. In addition, the three-service package is only $9 more expensive per month than Disney’s largest plan, making it difficult to refuse.
Read Also: Disney knocks Netflix of the top spot
Disney is also launching two new bundle plans: One option costs $9.99 for Disney+ and Hulu with commercials, while the other costs $12.99 for all three services with advertisements.
It appears that the media companies’ new focus is on connecting streaming services.
For instance, consider Warner Bros. Discovery. The parent company of CNN revealed last week that HBO Max and Discovery+, its two streaming services, would be combined in the summer of 2019.
The “Streaming Wars” were the “Rumble of the Bundles” was the name given to the first stage of the streaming revolution, which began around 2017.
So why will your streaming budget be affected even again? It’s because creating a profitable streaming service is quite costly.
Services like Disney invest millions, if not billions of dollars, in both the expensive infrastructure needed to hold it all together and in developing new content that appeals to current and potential members. Figure A: In the third quarter, Disney’s direct-to-consumer operation lost $1.06 billion, which is around four times more than the same period last year.
The maturation of streaming growth is also seen in its slower pace. For example, Netflix, the leader in streaming, lost customers for two consecutive quarters this year.
Gaining new customers has grown more difficult across the sector, and if subscription growth is decreasing, money must come from another source. One simple approach to achieve that is to raise the price. Disney can get away with this kind of pricing hike, given the size of its collection.
Marvel Studios, Pixar, Disney Animation, and Star Wars are just a few of the most well-known companies that can be found on Disney+. Along with other popular material, Hulu offers feature films from 20th Century Studios and TV series from FX.
Beyond just streaming
It wasn’t simply streaming that contributed to Disney’s successful third quarter. With revenues of $7.3 billion, up 70% from last year’s last quarter, the company’s parks, experiences, and goods unit had a tremendously successful quarter.
This was brought on, according to Disney, by “increases in attendance, occupied room nights, and cruise ship sailings.”