Disney+ is following in the footsteps of Netflix: the streaming platform is increasing its prices while offering a new formula with advertising. A Basic plan that is cheaper and more generous than that of its competitor…
A little over a month after the launch of Netflix’s low-cost formula, Disney+ is following in the footsteps of its competitor and launching Disney+ Basic, a subscription partly funded by advertising. A way to conquer a new audience, with a more “affordable” offer, and to collect money from advertisers. But unlike Netflix, which has a cheaper subscription, the big-eared platform comes with a price hike. 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+ Basic: 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 set up since December 8 new prices for subscriptions to its Disney+ SVOD platform. The formula has been renamed Disney + Premium and goes from 7.99 dollars to 10.99 dollars monthly, an increase of 37.5% – which should be felt on subscribers’ wallets, especially in this period of inflation. 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, are also subject to an increase. If this only concerns the United States for the moment, there is no doubt that other countries, including France, should also be entitled to it in the coming months.
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, 30 or 45 seconds long for a total of four minutes of ads per hour of content viewed – there are 45 seconds of advertising at the start of the viewing, then two or four cuts depending on its duration. 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 are 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 is accessible – this is not a “discounted” subscription –, and not all programs are concerned – for a question of ethics, programs for children at the kindergarten level escape it. However, it is impossible to download content to watch it offline. Regarding image quality, Disney + continues to offer its users streaming up to 4K Ultra HD, with HDR10 and Dolby Vision for compatible content, all on four screens simultaneously. Here again, the big-eared giant stands out from its competitor Netflix, which limits its users to HD – i.e. in a definition of 720p –, Full HD being reserved for the Standard package and 4K-UHD for the Premium package, and on a single screen. Bundles including Disney’s other SVODs, namely Hulu and ESON+, are also affected by this new offer.
In a press release, Michael Paull, president of Disney “Direct to Consumer”, explains the challenge of this new offer with advertising: “Today’s launch marks an important milestone for Disney+ and puts consumer choice first. With this new ad-supported offering, we’re able to provide greater flexibility for consumers to experience the full breadth and depth of The Walt Disney Company’s incredible way of storytelling.” And that only seems to be the beginning, since “a complete range of advertising products” will be offered later, explains the company. We can therefore expect different subscriptions with advertising that will be more financially accessible, but also with more limitations. A direction that Netflix also wants to take, since its co-CEO Ted Sarandos has said that other offers, in addition to Netflix Essential with advertising, are in the pipeline.
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 – in addition to this increase. 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”.