Disney+ Exceeded Expectations of Wall Street, Subscription Rate Hikes on the Horizon

Disney+, a streaming service, announced an increase in its subscription prices, prompting a range of responses from its users. Subscribers should pay extra unless they want to see sporadic pop-up ads.

Consumers currently pay $7.99 per month for ad-free access to a streaming service. The $7.99 pricing point would now be the tier that includes the commercials under the new ad-supported subscription tier Disney+ has introduced.

Disney+ subscribers who do not want advertisements to interrupt their time spent watching shows should pay an additional $3 for the new, ad-free offer, which costs $10.99 per month. The closest increase was made by Disney+ in March 2021, when it raised its subscription pricing by one dollar. This would be the biggest increase made by the streaming service since it launched in November, roughly two years ago.

Disney+ outperformed Wall Street projections during the most recent quarter, attracting more than 14.4 million users. Disney+ currently has a total of 152.1 million subscribers after this new acquisition. The good news immediately increased Disney+’s share price by 6.5%.

Disney to the top, beating competitors

During the second quarter, Disney+ brought in a total of $21.5 billion in revenue. This amount is 26% greater than the company’s second-quarter recorded income from last year. In comparison to the figures from a year ago, net profit increased by 53% to $1.4 billion.

Disney stressed that the total number of subscribers to all of its streaming services had risen to 221 million, surpassing Netflix’s recent record of 220.6 million.

Disney raised its long-term expectations in light of this new information. The massive streaming service would have 260 million customers by 2024, an increase of 30 million from its previous projection of 230 million. The prediction for Disney+ products has increased from 135 million to 165 million, while Disney+ Hotstar had to see an increase of 80 million in India.

“We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership, and significant subscriber growth at our streaming services,” said the CEO of Disney, Bob Chapek.

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Why Disney increased the prices of their tiers

Aside from Disney+, other Disney services have improved. For example, Hulu, which Disney owns in large part, changed its tiers. The ad-supported subscription package increased by $1 to $7.99, while the Hulu subscription without ads increased by $2 to $14.99.

On the other hand, there is no price rise for the Disney Bundle. Instead, the price remains the same at $19.99. The package includes an ad-free Hulu subscription, Disney+, and ESPN+. According to analysts, Disney may employ this tactic to persuade customers to choose the bundle rather than a single streaming service.

Disney recently introduced two bundle plans: the first is a $9.99 bundle that includes Disney+ and Hulu with advertisements, while the second is a $12.99 package that includes all three channels with advertisements.

Media firms have recently made it a normal practice to bundle several channels. For instance, HBO Max and Discovery+ will now be available in a bundle announced by Warner Bros.

The “Streaming Wars” that began in 2017 may enter a new phase, into the “Rumble of the Bundles” in late 2022 as a result of this new trend.

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To stay afloat, streaming companies need to update services

It is now getting harder for streaming companies to draw in new users as the competition rises. The number of subscribers may remain stable for a considerable period of time. This means that businesses must develop fresh revenue-generating strategies.

The simplest and most practical method to boost revenue for streaming services is to raise the prices of their services.

The chairman of Disney’s media and entertainment distribution of Disney said that the company would “be providing greater consumer choice at a variety of price points to cater to the diverse needs of our viewers and appeal to an even broader audience.”

Source: CNN