Disney CEO Bob Iger announced that the company will increase Disney+ prices for the second time in less than a year. The monthly cost of the ad-free plan will rise by $3 to $13.99 in October. Hulu, in which Disney has a majority stake, will also raise the monthly cost of its ad-free subscription by $3 to $17.99.
The more than 20% price increase means that Disney+ will now cost double the original price when the service launched four years ago, and Hulu’s ad-free plan is now more expensive than Netflix’s most popular plan.
When Disney+ launched in 2019, Disney stated that it had intentionally set the service’s price well below competitors’ “to reach as many people as possible.”
But the announced change shows the media giant’s intention to extract more revenue from streaming, pushing consumers towards ad-supported plans, which have proven to be more profitable.
“The advertising market for streaming is growing,” Bob Iger told investors during the quarterly conference call. “It’s healthier than the advertising market for linear television. We believe in the future of advertising on our streaming platforms, both Disney+ and Hulu.”
The decision by Disney is part of a trend in the industry aimed at maximizing profits. Paramount, Warner Bros. Discovery, NBCU, and even Netflix have raised prices this year in pursuit of profitability.
This move puts an end to much of the initial allure that led to the popularity of streaming. When Netflix first offered its service for just $8 a month, millions of people signed up, eager to access the company’s extensive catalog for just a fraction of the cost of a traditional cable TV package. This served as the genesis of the streaming era, with entertainment companies like Disney rushing to launch their own direct-to-consumer products at unsustainably low costs.
These enormous content libraries are becoming more expensive (not to mention shrinking) each year. In fact, consumers who subscribe to just a few streamers in 2023 will find that the final cost is effectively the same as cable TV. Combine this reality with the introduction of ads in streaming, and the end product resembles traditional on-demand cable TV.
Source: CNN