Disney+ announces price hike as sales sink across the company
(CNN) — The Walt Disney Company is hiking prices for its Disney+ streaming service again, as its third-quarter earnings report showed revenue struggles almost everywhere but international parks.
The streaming service’s ad-free subscription will cost $13.99 beginning October 12, an increase of $3 per month. This is the second time in less than a year Disney raised the price of its streaming offering; in December, the company upped the price of its ad-free tier to $10.99 from $7.99.
Disney owns a majority stake in Hulu, which will also see prices go up in October: its ad-free offering will rise $3 to $17.99. A new ad-free package of Disney+ and Hulu will cost $19.99.
However, the ad-supported subscription tier has been left out of the latest round of price hikes. That offering from Disney+ will remain at $7.99 per month, according to the company.
On Disney’s fiscal third quarter earnings call, CEO Bob Iger said these pricing decisions were made with the goal of pushing more Disney+ subscribers to the service’s ad-supported option.
“The advertising marketplace for streaming is picking up. It’s more healthy than the advertising marketplace for linear television,” Iger said.
The price hike comes after Disney reported that its streaming business remains unprofitable, though it has narrowed its revenue loss in the third quarter.
Streaming subscribers in the US and Canada are pulling back, as well. Disney reported a 1% decline in domestic subscribers for the second quarter in a row. International subscribers grew 2% in the quarter.
Iger also hinted that Disney+ is looking into ways to crack down on password sharing, a strategy that recently helped Netflix add millions of new subscribers.
“In calendar ’24, we’re going to get at this issue,” Iger said about password sharing. “We certainly have established this as a real priority. We actually think that there’s an opportunity here to help us grow our business.”
Questions surround Disney’s linear business
Overall, Disney reported slightly lower than expected revenue for its fiscal third quarter on Wednesday, with revenue shrinking in nearly every division but theme parks.
The company reported quarterly revenue of $22.3 billion compared to expectations of $22.5 billion, according to estimates from Refinitiv.
Revenue in linear television continued to slip, declining 7% compared to the same quarter last year.
Iger addressed the future of Disney’s linear assets, which include ABC, the Disney Channel, FX and National Geographic, after his comments about the business last month in an interview with CNBC fueled speculation that some of those might be put up for sale.
“While linear remains highly profitable for Disney today, the trends being fueled by cord-cutting are unmistakable,” Iger said. “As I’ve stated before, we’re thinking expansively and considering a variety of strategic options.”
Disney (DIS) shares initially fell in after-hours trading but reversed course to gain 3%.
Almost everything is shrinking except international parks
Disney’s parks were a bright spot, even as the company struggles with declining attendance at Disney World Resort in central Florida.
Disney parks, experiences and products revenues for the quarter increased 13% to $8.3 billion, which the company said reflected growth in its international parks, like Shanghai Disney Resort and Hong Kong Disneyland Resort.
“The increase at Shanghai Disney Resort was due to the park being open for all of the current quarter compared to 3 days in the prior-year quarter as a result of Covid-19 related closures,” the company said in a statement.
However, Disney acknowledged that the division’s growth was partially offset by lower revenue at its US-based domestic parks. The company attributed Disney World’s slowdown in attendance to fading post-Covid pent-up demand for travel to Florida, which fully reopened from pandemic lockdowns earlier than other US states.
In fact, recent signs point to a slowing of tourism to Central Florida. Orange County, which includes Orlando, collected 6.7% less in taxes on hotel stays in May of this year compared to the same time last year, according to the Orange County Comptroller’s office.
Iger on the Hollywood strikes
“Nothing is more important to this company than its relationships with the creative community, and that includes actors, writers, animators, directors, and producers,” he said. “I have deep respect and appreciation for all those who are vital to the extraordinary creative engine that drives this company and our industry. And it is my fervent hope that we quickly find solutions to the issues that have kept us apart these past few months. And I am personally committed to working to achieve this result.”