Disney said Wednesday that it is raising prices for streaming subscribers in the United States who want to watch Disney+ without ads, as more people switch to what CEO Bob Chapek called the “best value in streaming.”
The Walt Disney Company announced Wednesday that it is raising prices for streaming subscribers in the United States who want to watch Disney+ without ads, as more people switch to what CEO Bob Chapek described as the “best value in streaming.”
The price increases are linked to a new tiered service that Disney will launch for US subscribers in December. Today, the basic Disney+ service costs $7.99 per month. Starting in December, that basic service will include advertisements, so subscribers who prefer no advertisements will have to upgrade to a premium service, which starts at $10.99 per month, a 37.5% increase over current prices. An annual plan will set you back $109.99.
“We expect the ad tier to be popular, and we expect some people to prefer ad-free,” Chief Financial Officer Christine McCarthy said during an analyst call.
Netflix’s most popular streaming plan in the United States is now $15.50 per month, with the top-tier plan costing $20 per month. This comes after several rate increases 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 expired between the companies.
In the April-June fiscal quarter, Disney said it added 14.4 million subscribers to its Disney+ streaming service. In total, Disney streaming services, which include Hulu and ESPN+, had about 221 million subscribers, putting the entertainment conglomerate slightly ahead of Netflix in the streaming wars.
Netflix had 220.7 million subscribers at the end of June, despite losing nearly 1 million in the previous quarter.
Over the same period last year, paid subscriptions to Disney+ increased by 31%, with the majority of that growth occurring internationally. However, revenue growth was muted due to operating losses from “increased programming and production, technology, and marketing costs.”
Disney’s growing streaming sales, combined with a recovering theme park business following pandemic-era closures, helped the Burbank, California-based entertainment conglomerate beat Wall Street expectations with quarterly earnings released Wednesday.
Disney reported $21.5 billion in revenue for the three months ending July 2, a 26% increase over the same period last year.
When certain items were excluded, earnings per share came to $1.09. According to FactSet Research, analysts polled predicted adjusted earnings of 97 cents per share on revenue of $20.99 billion for the quarter.
Disney reported that sales at its parks, experiences, and products segment increased by 70% to $7.39 billion, up from $4.34 billion the previous year. The figures represented an ongoing recovery from COVID-19 restrictions, which temporarily closed all of Disney’s parks in 2020, reduced capacity through much of 2021, and continue to affect some locations, such as Shanghai Disneyland, which was open for only three days during the April-June quarter.
When certain items were excluded, earnings per share came to $1.09. According to FactSet Research, analysts polled predicted adjusted earnings of 97 cents per share on revenue of $20.99 billion for the quarter.
Disney reported that sales at its parks, experiences, and products segment increased by 70% to $7.39 billion, up from $4.34 billion the previous year. The figures represented an ongoing recovery from COVID-19 restrictions, which temporarily closed all of Disney’s parks in 2020, reduced capacity through much of 2021, and continue to affect some locations, such as Shanghai Disneyland, which was open for only three days during the April-June quarter.
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