The price hikes will result in a monthly cost increase of $3, or approximately 27%, for ad-free Disney+, bringing it to almost $14. Similarly, ad-free Hulu will see a $3 increase, making it almost $18 – a 20% increase that will make it more expensive than Netflix’s most popular ad-free tier.
Iger made these statements following the release of Disney’s mixed earnings for the third fiscal quarter, ending on July 1. While the company reported a 4% increase in revenue for the quarter, it also experienced a net loss of $460 million, compared to a profit of $1.4 billion in the previous year. Disney’s streaming service, Disney+, narrowed its losses in the quarter but lost domestic subscribers in the U.S. and Canada for the second consecutive quarter. Internationally, it experienced declines for the third consecutive quarter, with issues in the Indian market contributing to this trend.
In order to encourage consumers to choose the cheaper ad-supported versions of these services, Iger stated that the price hikes are intentional. He noted that the advertising market for streaming is thriving and healthier than traditional TV ads. Iger also mentioned a password-sharing crackdown, without providing specific details. However, he suggested that Disney could resume benefits in 2024, and that the work in this area may not be completed by that year. He also acknowledged that they couldn’t predict how many password sharers would switch to paid subscriptions.
Some analysts doubt whether these measures, including the price hikes and password-sharing crackdown, can lead Disney back to sustainable growth. Paul Verna, an analyst with Insider Intelligence, commented that the company’s actions are unlikely to appease investors who are seeking clarity on Disney’s strategy for its streaming services and TV networks. He also emphasized that the improvements in Disney’s streaming losses primarily resulted from cost-cutting rather than organic growth, indicating a lack of a solid plan for the company.
Disney is currently undergoing a strategic reorganization that includes a reduction of around 7,000 jobs to save $5.5 billion. Iger, who took over as CEO from Bob Chapek in November, has been focusing on turning around Disney’s streaming business while maintaining the financial strength of its theme parks. The theme parks are vital to Disney’s overall business and have been a priority for Iger. Changes have already been implemented at U.S. parks to reconnect with Disney theme park enthusiasts and restore their confidence in the brand.
Iger has also been involved in protecting Disney World’s theme park district from a takeover by Florida Governor Ron DeSantis. Disney sued DeSantis in April, accusing him of retaliatory actions after the company opposed a law known as “Don’t Say Gay.” A group of mainly Republican former government officials recently criticized the governor’s takeover, stating that it severely damages the state’s political, social, and economic fabric.
Last month, Disney announced that Iger will remain as CEO of The Walt Disney Co. until the end of 2026. This two-year contract extension allows the entertainment and theme park company time to find a suitable successor.
On Tuesday, ESPN, which is owned by Disney, announced a lucrative deal to rebrand a sports betting app owned by Penn Entertainment as ESPN Bet. Penn Entertainment will pay $1.5 billion, along with other considerations, in exchange for exclusive rights to the ESPN name, while continuing to operate the betting app.