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Disney raises streaming prices after services post multiple operating failures

Disney increases streaming fees following a string of operational failures

August 12, 2022: -Disney revealed a further pricing structure incorporating an advertising-supported Disney+ as part of an action to make its streaming business profitable.

Starting December 8 in the U.S., Disney+ with commercials will be $7.99 per month, currently the price of Disney+ without ads. The cost of ad-free Disney+ will grow 38% to $10.99, a $3 per month increase.

The price of Hulu without ads will increase by $2 per month, from $12.99 to $14.99, effective October 10. Hulu with ads will go up by $1 per month, rising from $6.99 to $7.99.

Disney announced in the previous month that ESPN+ with ads would go up 43% to $9.99 per month.

The price increases reflect the increased operating loss for Disney’s streaming services. Disney+, Hulu, and ESPN+ combined to lose $1.1 billion in the fiscal third quarter, $300 million over the average analyst estimate, reflecting the higher cost of content on the services. The increased working loss occurred even while Disney counted about 15 million new Disney+ subscribers in the quarter, nearly 5 million more than analysts estimated.

Disney has said that it intends to lose money on Disney+ until 2024. Chief Financial Officer Christine McCarthy reiterated on Wednesday’s earnings conference call that Disney+’s losses peaked during the company’s fiscal 2022.

The average revenue per user for Disney+ decreased by 5% in the quarter in the U.S. and Canada because of more customers taking cheaper multiproduct offerings.

The firm’s quarterly results, also announced Wednesday, beat analysts’ expectations on the top and bottom lines. Disney+ subscriptions rose to 152.1 million in the most recent period, higher than Wall Street’s projections of 147 million.

Counting Disney+, ESPN+, and Hulu, Disney has 221 million streaming subscribers.

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