From December 8, 2022, Disney+ will increase its prices while offering a new, cheaper formula with advertising. An evolution that is part of the same approach as Netflix, the other streaming video giant.
Is it better to pay more for your Disney++ subscription or accept the display of advertisements to take advantage of a lower price? This is the dilemma that users of the video-on-demand service will soon be faced with. Indeed, from December 8, 2022, the American family entertainment giant will both increase the price of its classic subscription and launch an advertising-financed formula. This development only concerns the United States at first. But other countries including France should also be entitled to it. And, judging by the firm’s recent statements, this will surely not be the last increase to come…
Disney+: a subscription with advertising
The prices of subscriptions to streaming video platforms in SVOD (video on demand) have all increased in recent months, which does not help users’ business in this period of generalized inflation. To align with its competitors and be more profitable, Disney has announced new prices for subscriptions to its Disney+ SVOD platform. The formula has been renamed Disney + Premium and will go from 7.99 dollars to 10.99 dollars monthly, an increase of 37.5%. For its part, the annual subscription will go from 69.99 dollars to 109.99 dollars. Of course, the prices of its various packs, which contain Hulu and/or ESPN+ offers, will also be increased.
The firm is also launching a new “low-cost” subscription which includes advertising. This one, called Disney + Basic, is launched at a price of 7.99 dollars per month, the price of the current high-end offer… The advertisements are integrated during the broadcast of the series or the film – and impossible to pass them in fast forward – and last between 15 to 30 seconds long for a total of four minutes of ads per hour of content viewed. On its US website, the firm states that “Ads usually play before the video begins and throughout playback – it’s similar to what you see ads during a traditional TV show.“They will be personalized according to”what you’re watching, where you are, and what you’ve watched previously.”The good news is that unlike Netflix, the entire catalog will be accessible, and not all programs should be affected – for a question of ethics, children’s programs escape it. However, it is impossible to download content to watch it offline. Regarding the image quality, we do not know if it will be impacted. Currently, the platform broadcasts content in Full HD or 4K. But if we take the model of the new Netflix formula, users are limited to HD – i.e. in a definition of 720p –, Full HD being reserved for the Standard formula and 4K-UHD for the Premium plan. Hulu, which also belongs to Disney, also adopts the new formula, for a price of 7.99 dollars per month against 14.99 for the subscription without advertising – a big difference therefore.
Disney+: a new price increase coming soon
During the conference Communcacopia + Technology 2022 of Goldman Sachs which took place in September, the CEO of Disney, Bob Chapek spoke about the future of the platform, stating in particular: “our price is far below the value we offer.” He thus made it clear that the price of the subscription could still increase soon. A bet that seems a bit risky, especially when we know that streaming services in France will multiply with the arrival of HBO Max, Universal + and Paramount + in particular. Users will therefore have to make choices for their entertainment budget since they will not be able to take all the subscriptions. But that doesn’t seem to worry Disney: “We believe that the consequences of the price increase on churn will be negligible”, explained BobChapek, especially with the arrival of the formula with advertising, which “will make it possible to truly satisfy the variety of consumer needs” – since all subscribers will have access to the same content, whatever the offer.
The big-eared firm is betting a lot on its SVOD platform, even going so far as to consider a subscription similar to Amazon Prime and Apple One, with a paid loyalty service that would bring together products and services from its huge empire. An idea that would prove all the more profitable as it would allow it to combine data from Disney+ customers with that of the company’s businesses, such as its theme parks and cruise trips. “We can now personalize an experience far beyond what we have been able to do so far.“, had declared the CEO of the company. As a result, Disney + “will become an engagement platform” and “not just a movie service.”
Disney +: the streaming service aligns with its competitors
Disney had unveiled in August its results recorded in the last quarter of 2022 – closed on June 30. The entertainment giant managed to attract 14.4 million new subscribers to its Disney+ video-on-demand (SVOD) platform between March and June 2022, bringing it to a total of 152 million users. By adding the 22.8 million users of ESPN+ and the 46.5 million of Hulu – which both belong to the firm –, the Disney company reaches 221.1 million subscribers to its SVOD services. It therefore passes Netflix and 220.67 million users – which lost subscribers this year for the first time in its history. The firm hopes to continue its momentum by reaching 230 to 260 million subscribers by the end of 2024, and therefore be fully profitable. Mike Proulx, Vice President and Research Director of Forrest, explained that “in the streaming war, Disney+ is currently winning — gaining subscribers at a time Netflix is losing. Disney+ continues to gain momentum from strong content based on its intellectual property that has universal appeal.” The platform goes for it to be able to rely on its favorite universes, namely Marvel and Star Wars, which it continues to expand.
These changes are hardly surprising since Disney+ is only aligning itself with the policies of its main competitors Netflix and Amazon. Indeed, Netflix has just rolled out the Netflix Essential package, a more affordable subscription thanks to advertisements and a partnership with Microsoft – but which does not provide access to the entire catalog. In the same vein, Amazon has increased the prices of its Prime offer – including in Europe – with an increase of almost 43% for a one-year subscription, causing a strong wave of discontent.
“It is essential that Disney+ keeps the momentum going by delivering compelling content in the second half of this year to justify not only continued spending, but also a big price hike in December,” affirmed Mike Proulx, acknowledging, however, a “questionable marketing choice at a time when consumers are feeling an additional financial pinch that could only get worse in 2023.” These changes have only been announced for the United States so far and will take effect from December 8th. If Disney has not yet mentioned the European market, there is no doubt that this change will come to us too – as in the case of Amazon, the United States often serves as a “test”.