Walt Disney Co. (DIS.N) announced plans to raise prices for customers who want to watch Disney+ or Hulu without commercials after surpassing Netflix Inc. (NFLX.O), with 221 million streaming subscribers.
The streaming service says, to help attract new customers, Disney will offer an ad-supported version starting on Dec. 8 for $7.99 a month, the same price it now charges for the ad-free version.
In 2017, Disney bet its future on developing a streaming service to compete with Netflix as viewers shifted away from traditional cable and broadcast television in favor of online viewing. Disney surpassed Netflix in terms of total streaming subscribers five years later.
When Disney starts to offer a brand-new option that includes ads for the current price in December, the streaming service will survive while increasing the monthly cost of Disney+ without advertising by 38% to $10.99.
Depending on the plan, Hulu’s prices will also increase by $1 to $2 per month in December. On Wednesday, Disney+ decreased its long-term subscriber forecast for its customers and cited the loss of cricket rights in India as the reason.
By September 2024, Disney anticipates having between 215 million and 245 million Disney+ subscribers. Reduced expectations for India, where the company will no longer be able to stream cricket games from the Indian Premier League, led to the adjustment. This is less than the 230 to 260 million that Disney had initially expected.
Alternatively, analyst Haris Anwar said, “Disney still has more room to grow in international markets where it’s rolling out its service fast and adding new customers.” While the company still anticipates that its streaming TV division will be profitable in fiscal 2024, it lost $1.1 billion in the most recent quarter.
Disney’s stock increased 6.9% to $120.15 on Wednesday through after-hours trading.
Losses from streaming hurt the media and entertainment division, which saw a 32% decline in profit to close to $1.4 billion. The total revenue was $21.5 billion, up 26% from the prior year and higher than the analyst consensus of $20.96 billion.
As more people flocked to its theme parks, Disney’s third fiscal quarter ended on July 2 with adjusted earnings per share of $1.09, up 36% from last year. The parks, experiences, and products division’s operating income increased to $3.6 billion, more than doubling.
With Doctor Strange in the Multiverse of Madness and Thor: Love and Thunder, respectively, becoming the third (nearly $1 billion) and sixth-highest ($700 million) global grossing movies of the year, Disney has continued its run of success this year. With I Am Groot, She-Hulk: Attorney at Law, Star Wars: Andor, and The Guardians of the Galaxy Holiday Special on Disney+, in addition to the eagerly anticipated theatrical debut of Black Panther: Wakanda Forever, Disney also has a robust slate of content to close out the rest of 2022.
