AP – Walt Disney Co said on Wednesday it is raising prices for streaming subscribers in the United States (US) who want to watch Disney+ without ads, as more viewers switch to what CEO Bob Chapek described as the “best value in streaming”.
The price increases are tied to a new tiered service Disney will launch in December for US subscribers. The basic Disney+ service today costs USD7.99 per month. Starting in December, that basic service will run ads, so a subscriber who wants no ads will have to upgrade to a premium service that starts at USD10.99 per month, a 37.5-per-cent rise over current prices. An annual plan will cost USD109.99.
“We expect the ad tier to be popular and we expect some people to want to stay with ad-free,” Chief Financial Officer Christine McCarthy said on a conference call with analysts.
Netflix’s most popular streaming plan in the US is now USD15.50 per month, and its top-of-the-line plan is USD20 per month. That follows several rate hikes to help pay for its original programming, which has become even more important since Disney pulled its programming and classic movies from Netflix after licensing agreements between the companies expired.
Disney said it added 14.4 million subscribers to its Disney+ streaming service in the April-June fiscal quarter. In total, subscribers to all Disney streaming services, which include Hulu and ESPN+, amounted to about 221 million, putting the entertainment giant slightly ahead of Netflix in the streaming wars.
Netflix ended June with 220.7 million subscribers after losing nearly one million subscribers in the past quarter.
Disney said paid subscriptions for Disney+ grew by 31-per-cent, much of that internationally, over the same time last year. But revenue growth was not as strong due to operating losses from “higher programming and production, technology and marketing costs”.
Disney’s growing streaming sales, combined with a recovering theme park business after pandemic-era shutdowns, led the Burbank, California-based entertainment giant to beat Wall Street expectations with quarterly earnings on Wednesday.
Disney reported revenue of USD21.5 billion in the three months through July 2, up 26 per cent from the same time last year.
Earnings per share came to USD1.09 when excluding certain items.
Analysts polled by FactSet projected adjusted earnings of USD0.97 per share on revenue of USD20.99 billion for the quarter, according to FactSet Research.