After an initial price increase and the introduction of a formula with advertising, Disney+ could still increase its prices soon, the CEO of Disney believing that its streaming service is much better than its competitors.
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. And it’s obviously not over. Thus, like Netflix and Amazon Prime Video, Disney+ has already revised its prices upwards – in the United States for the moment, but there is no doubt that France will soon follow in its footsteps. This is the first time since its launch that Disney+ has increased them, but it will surely not be the last…
Disney +: a new price increase soon?
Indeed, during the conference Communcacopia + Technology 2022 of Goldman Sachs, the CEO of Disney, Bob Chapek spoke about the future of the platform, and in particular estimated that “our price is far below the value we offer.” It thus clearly suggests 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 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 who doesn’t seem to worry Disney: “We believe that the consequences of the price increase on churn will be negligible”, explains 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 to be 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.“, declares the CEO of the company. As a result, Disney+ “will become an engagement platform” and “not just a movie service.”
Disney+: the rising streaming service
Disney had unveiled 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, explains 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.
Disney took the opportunity to announce an increase in the price of the Disney + subscription but also the arrival of a new low-cost formula with advertising. In this way, Disney+ aligns with the policies of its main competitors Netflix and Amazon. Indeed, earlier this year, Netflix revealed a new subscription that’s more affordable thanks to ads and a partnership with Microsoft – but that won’t 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.
Disney+: a subscription with advertising
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 also took the opportunity to unveil the launch of a new “low-cost” subscription which will include advertising. This one, titled Disney+ Basic, will be launched at a price of $7.99 per month, the price of the current high-end offer… These will be commercials 15 to 30 seconds long for a total of four minutes of ads per hour of content viewed. The good news is that unlike Netflix, the whole catalog will be accessible, and not all programs should be affected – let’s hope that, for a matter of ethics, children’s programs are exempt.
“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,” says 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”.