By
Tolu Ajiboye
February 9th, 2024
Disney announced new pricing rates for its streaming businesses in order to increase its profits.
Shares of The Walt Disney Company (NYSE: DIS), popularly called Disney, grew nearly 7% in after-hours trading after the company exceeded expectations in its fiscal Q3 results. The media hub revealed that its quarterly earnings per share (EPS) surpassed analysts’ expectations of 96 cents to $1.09 per share. Revenue also came in at $21.5 billion, higher than the $20.96 billion expected. More interestingly, Disney+ subscriptions increased more than analysts had forecasted. Expectations were that Disney+ subscriptions would pump to 147 million. However, the streaming service recorded 152.1 million subscriptions.
Disney Announces Fiscal Q3 Results
When the fiscal Q3 ended, all subscription streaming services owned by Disney accounted for over 222 million streaming subscribers. Hulu had 46.2 million subscribers, and ESPN+ reported 228 million. The combination of the numbers ramps up subscribers to 221 million. On the other hand, the most recent tally shows that Netflix (NASDAQ: NFLX) had 22o million subscribers.
After the fiscal Q3 performance, Disney is exploring ways to handle its significant operating loss. Combinedly, Disney+, Hulu, and ESPN+ lost $1.1 billion during the last fiscal quarter. The operating loss is an indication of the higher cost of content on the streaming services. The average revenue per user for Disney+ in Canada and the US also fell 5% during the quarter. Amid the growing operating loss for Disney, which is reflected in its fiscal Q3 financial performance, the company has reviewed its pricing structure.
Disney’s New Pricing Structure
Disney announced new pricing rates for its streaming businesses in order to increase its profits. The company has incorporated a new pricing model that supports advertising on Disney+ and Hulu. Starting from the 8th of December, US customers will begin to pay $7.99 per month for Disney+ with ads. Meanwhile, this is currently the exact amount required to subscribe to Disney+ without commercials. The new pricing structure placed ad-free Disney+ subscription to $10.99, representing a 38% or $3 per month jump.
On the other hand, minus advertising, Hulu subscriptions will grow by $2 per month. This means customers will begin to pay $14.99 instead of $12.99 from the 10th of October. Also, Hulu plus commercials will go from $6.99 to $7.99, an additional $1. The restructuring came about a month after the media company raised the price of ESPN+ by 43% to $9.99 per month. Disney said the new price, formerly $6.99, would take effect from the 23rd of August.
Furthermore, Disney has reduced its 2024 forecast for Disney+. Disney+ had set its guidance at between 230 million to 260 million. However, Disney has lowered the expectation to between 215 million to 245 million.