Disney+ Announces New Ad-Tier Subscription Packages, Rates Go Up as Streaming Giant Ends Second Quarter

Photo Credit: Disney+

Streaming company Disney+ announced an increase in its subscription rates, rendering varied reactions from its subscribers. Unless a person is willing to watch ads that pop out periodically, subscribers ought to pay more.

At the current, consumers pay $7.99 per month for the streaming service without the presence of ads. However, under the new ad-supported subscription tier launched by Disney+, the $7.99 price point would now be the tier that comes with the advertisements.

Subscribers who do not want to have the ads interrupting their leisure time watching the shows on Disney+ should pay three dollars more, as the new offer without the ads comes at $10.99. This would mark the largest increase made by the streaming company since it debuted last November 2019, the closest increase Disney+ made was in March 2021, when it increased its subscription rate by 1 dollar.

During the latest quarter, Disney+ recorded outstanding performance, gathering over 14.4 million subscribers, defeating the expectations of Wall Street. With this new addition, Disney+ now has a total of 152.1 million subscribers. The positive report immediately sent Disney+ shares by 6.5%.

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Disney is on its way to the top

With Disney+, Disney generated a total of $21.5 billion in revenue during the second quarter. This figure is 26% higher than the recorded income of the company from last year’s second quarter. Net profit reached $1.4 billion, up by 53% compared to the data from a year ago.

Disney emphasized that the current number of subscribers of all its streaming services is now at 221 million, overtaking the 220.6 million subscribers of the streaming leader, Netflix.

With this new data, Disney amped up their long-term expectations. By 2024, the streaming giant would have raked in 260 million subscribers, up by 30 million from its former forecast of 230 million. Disney+ products forecast has been revised from 135 million to 165 million, while Disney+ Hotstar in India has been upped by 80 million.

“We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership, and significant subscriber growth at our streaming services,” said Bob Chapek, the CEO of Disney.

What urged Disney to increase prices

Disney services have also gone up apart from Disney+. For instance, Hulu, which Disney majorly owns, saw a change in its tiers. Ad-supported subscription package went up by $1 to $7.99, whereas the Hulu subscription without the ads now comes at $14.99 – up by $2.

The Disney Bundle, however, does not see any price increase. Instead, the cost is still stagnant at $19.99. the bundle features a Hulu subscription, Disney+, plus ESPN+, all without ads. Analysts say that Disney might use this strategy to force their consumers to opt for the bundle instead of just picking a specific streaming service.

Disney just launched two bundle plans: first is the bundle that includes Disney+ and Hulu with ads, which costs $9.99; second, it includes all three channels at just $12.99, but with ads.

Recently, media companies have made it common to tie up multiple channels for bundles. For instance, Warner Bros. made an announcement of a bundle merging HBO Max and Discovery+.

With this new trend, the streaming industry might be headed towards a new phase, from the “Streaming Wars” that started in 2017 to “Rumble of the Bundles” in late 2022.

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What streaming companies are doing to stay afloat

As the competition increases, it is now becoming more difficult for streaming platforms to attract new customers. For a long time, the number of subscribers might only fluctuate at a certain level. This means that companies need to find new ways to generate revenue.

Streaming services resort to price increases – the easiest and the most practical way of increasing revenue.

The chairman of the media and entertainment distribution of Disney said that they would “be providing greater consumer choice at a variety of price points to cater to the diverse needs of our viewers and appeal to an even broader audience.”

Source: CNN

Opinions expressed by US Business News contributors are their own.

Ivan Ryan

Posted by Ivan Ryan

Ivan is a digital marketer with an interest in business. He loves reading self-help books and memoirs of successful people in business.

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