In Disney’s Push for Streaming Profitability, More Price Hikes Are Imminent

Disney is making its ad tier numbers (and price hikes) part of your world.

During an earnings call on Wednesday evening, CEO Bob Iger shed some light on Disney+’s ad tier, revealing that, as of the end of Q3, the ad-supported plan has added 3.3 million subscribers since launching in December. And according to the CEO, 40% of new Disney+ subscribers are choosing an ad-supported product.

The news comes as Disney looks to boost the profitability of its streaming business, which cut down on losses in the most recent quarter, losing $512 million vs. $1.06 billion in the same period last year. The company also improved direct-to-consumer (DTC) operating income by $1 billion in three quarters, according to Iger.

Notably, domestic Disney+ average monthly revenue per paid subscriber increased from $7.14 to $7.31 due to higher per-subscriber ad profits. And Disney is expecting to increase profitability even more by introducing significant price hikes later in the year.

Though the company just recently increased streaming prices in December, more price hikes are coming on Oct. 12 in an apparent push to get subscribers on the ad-supported plan. Disney+’s ad-free plan will increase from $10.99 to $13.99, Hulu’s ad-free plan will increase from $14.99 to $17.99, and ESPN+ with ads will increase from $9.99 to $10.99.

However, the company is keeping the cost of Disney+ and Hulu standalone ad-supported tiers at $7.99/month each, with the bundle still $9.99/month. Subscribers in the U.S. will also be able to access an ad-free bundled subscription plan featuring Disney+ Premium and Hulu ad-free for $19.99/month on Sept. 6.

Disney+ also announced an ad-supported offering that will be available in select markets across Europe and Canada on Nov. 1. The new ad-supported plans start at £4.99/€5.99 month in EMEA and $7.99/month in Canada.

“We believe in the future of advertising on our streaming platforms, both Disney+ and Hulu, and we’re obviously trying with our pricing strategy to migrate more subs to the advertiser-supported tier,” Iger said during the earnings call, adding, “A substantial amount of new subscribers to Disney+ are signing up for the ad-supported tier, which suggests that pricing is working for us in that regard.”

The company is still shedding subscribers on its path to streaming profitability, as Disney+ finished the quarter with 146.1 million subscribers globally, 7.4% fewer than the 157.8 million it had in the previous quarter, with most of the churn coming from Disney+ Hotstar.

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