Disney is raising prices on its streaming services and expanding a version containing adverts to markets including the UK.
The monthly cost of ad-free Disney+ in the US will rise by $3 to almost $14 and the cost of Hulu without adverts will go up 20% to $18.
In the UK, the basic ad-free subscription costing £7.99 a month will increase to £10.99 a month from 1 November by becoming a “premium” package, although subscribers will have the option trade down to a cheaper version. The company will also launch a version with adverts costing £4.99 a month. Hulu is not available in the UK.
Disney’s chief executive, Bob Iger, vowed on Wednesday to make the entertainment and media conglomerate’s streaming products profitable as he announced the price changes and a crackdown on password sharing. The move echoes a similar tactic by Netflix, the market’s biggest player, which has also reacted to slowing growth with an ad tier and password rule changes.
Disney reported narrower losses on its Disney+ streaming platform in third-quarter results on Wednesday. Disney+, whose hits include Star Wars spin-off The Mandalorian and chef drama The Bear, now has 146 million subscribers worldwide, compared with 238 million at Netflix.
The subscriber total for Disney+ represented a 7% decline on the prior quarter, due to its India unit losing the rights to the Indian Premier League cricket competition.
Disney is in the middle of a “strategic reorganisation″ aimed at saving $5.5bn across the company. The division containing the streaming operations reported a narrower loss of $500m, but admitted that production costs had still risen.
Disney reported a 4% increase in overall revenue for the quarter but swung to a net loss of $460m from a year-earlier profit of $1.4bn.
While the company reported narrower losses on Disney+ in the quarter, the service lost domestic subscribers in the US and Canada for the second consecutive quarter.
Iger said the price rises were intended to steer consumers toward cheaper ad-supported versions of these services, whose subscription prices are not changing – at $7.99 a month in the US. The advertising market for streaming was “picking up”, he said, noting that it was healthier than traditional TV ads. “We’re obviously trying with our pricing strategy to migrate more subs to the advertising-supported tier.”
Iger did not provide details about Disney’s password-sharing crackdown beyond saying that the company could reap some benefits in 2024, although he added that the work “might not be completed” that year, and that Disney could not predict how many password sharers would switch to paid subscriptions.
Some analysts expressed doubt as to whether price rises and password crackdown could do much to lead Disney back to sustainable growth.
Paul Verna, an analyst with Insider Intelligence, said the company’s moves were unlikely to calm investors “anxious for clarity on the company’s strategy for its streaming services and TV networks”.
While a narrowing in Disney’s streaming losses was heartening, he argued, the improvements owed more to dramatic cost-cutting than organic growth, suggesting that Iger still did not have a plan for putting Disney on a sound footing.
Disney also owns a theme park business, the ABC and ESPN broadcast networks, and a substantial Hollywood unit including the Disney and 20th Century studios.
