Media and entertainment giant Disney (DIS) is not taking any chances when it comes to meeting its goal of reaching over 230 million total paid subscribers for its streaming service Disney+ by the end of fiscal year 2024.
The company on March 4 said it will expand its Disney + offerings for users by introducing a cheaper ad-supported subscription in addition to its existing $7.99 monthly plan that is ad-free.
The move comes at a time when operating losses at Disney+ rose for the latest quarter as costs related to higher programming, technology, and marketing outstripped growth in subscription revenue.
While the company did not disclose pricing details immediately it said the new plan will first be made available to customers in the U.S. beginning in late 2022.
Disney+ Has Been a Growth Monster
Disney+ clocked 130 million paid subscribers at the end of 2021 and added 11.8 million during the three months ended January 1.
"Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone - consumers, advertisers, and our storytellers,” said Disney Media and Entertainment Chairman Kareem Daniel in a statement.
The Disney+ plan with a lower price point is expected to launch in international markets next year, the company said.
“More consumers will be able to access our amazing content. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families," Daniel added.
Disney's fiscal-first-quarter operating results in the direct-to-consumer segment decreased by $127 million year over year, driven by higher losses at Disney+ and ESPN+, the company said.
Operating losses from Disney's direct-to-consumer segment widened to $593 million from $466 million.
Direct-to-Consumer revenues, which includes revenue from Disney+, ESPN+ and Hulu, for the latest quarter increased 34% to $4.7 billion and operating loss widened 27% to $0.6 billion.
Lower results at Disney+ reflected higher programming and production, marketing, and technology costs, partially offset by an increase in subscription revenue. Higher subscription revenue was due to subscriber growth and increases in retail pricing, Disney said.
Pixar's Turning Red and Marvel Studios' Moon Knight will be streaming on Disney+ this month and two Star Wars series: Andor and the highly anticipated Obi-Wan Kenobi will premiere on May 25.
Disney Enters the Streaming Pricing Wars
Earlier this week, WarnerMedia's cable news channel CNN said "it will launch a news and entertainment streaming service called CNN+ this spring, at an initial discounted subscription price of $2.99 a month," Reuters reported. After a four-week long early bird discount, the platform will revert to a $5.99 monthly fee.
WarnerMedia, a unit of AT&T (T), will in the coming months prepare to spin off and merge with Discovery (DISCA).
Separately, rival Netflix (NFLX) slashed its prices in India very aggressively in December. Its most basic plan in India now costs $2.65 a month while its high-end premium offering costs a little over $8. The entertainment giant's mobile-only viewing plan starts at even lower entry price point that costs $2 a month.
