Disney has ambitious plans for the future including a major change that customers may not like.
The entertainment conglomerate is seeing success in multiple areas of its business, such as film and television production, theme parks, and streaming, which are all currently bringing in massive profits for the company.
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Disney’s fourth-quarter earnings report for 2024 revealed that it earned $22.6 billion in revenue, a 6% increase from the same quarter in 2023.
Related: Disney flags startling shift in consumer behavior at theme parks
Disney’s streaming business is especially booming. Its platforms Hulu, ESPN+ and Disney+ faced a 15% year-over-year revenue increase during the quarter due to higher prices and new subscribers.
Disney announces upcoming changes to streaming platforms
While its streaming services are blossoming, Disney believes that there is room to grow those platforms, which involves raising prices once again.
According to a recent earnings call, Disney Chief Financial Officer Hugh Johnston claimed that the company’s "exceptional content” on its streaming platforms justifies another price increase.
“We certainly look to continue to increase pricing in line with the value that we're providing to consumers,” said Johnston. “And a lot of the growth that we're seeing right now is because of the exceptional content that's coming out of both the movie and the TV studios that's obviously our proprietary content. So, that'll certainly enable us to increase pricing over time.”
Disney wants subscribers off of its ad-free plans
Disney CEO Bob Iger claimed during the call that the company hopes raising prices will help move some of its streaming customers off of ad-free plans. When and how much the subsequent price increase will cost weren't specified.
“It's not just about raising pricing; it's about moving consumers to the advertiser-supported side of the streaming platform,” said Iger.
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The CEO claims that so far, 60% of the company’s new subscribers in the U.S. have purchased ad-supported plans, while only 37% of all U.S. subscribers are enrolled in ad-supported plans.
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Iger said advertisers have an increased interest in the streaming business, prompting Disney to make this move.
The decision also comes after Disney generated lower advertising revenue from Hulu and ESPN+ during its fourth quarter.
Disney doubles down on password sharing crackdown
The company also noted during the call that it will roll out new updates and features on its streaming platforms to “increase engagement and reduce churn” and to increase ad monetization.
Disney will also expand its password sharing crackdown, which was first announced in February and was launched in a few countries in June. It has yet to affect U.S. customers, but Iger said during the call that Disney has rolled out the initiative in 130 countries.
Disney’s plan to raise prices for its streaming services comes after it rolled out a major price hike on Oct. 17.
The monthly price for both the ad-supported and ad-free Disney+ plans increased by $2 a month. Also, Hulu’s ad-supported plan increased from $8 to $10 a month, while its yearly plan increased by $20. In addition, ESPN+ rose from $11 to $12 a month, and its annual plan spiked by $10.
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