Kennywood
Kennywood
- Joined
- Jan 1, 2012
Disney’s era of budget-priced streaming video packages and galloping subscriber growth has come to an end.
For the second time in about a year, Disney announced a round of major price increases to its streaming products, raising the cost of the ad-free versions of Disney+ and Hulu by double digits. The company also vowed to crack down on password-sharing, an effort that streaming rival Netflix started in earnest earlier this year.
“We are actively exploring ways to address account sharing and the best options for paying subscribers to share their accounts with friends and family,” Disney Chief Executive Robert Iger told investors during a conference call to discuss the company’s latest results.
The price increases come as the company earlier Wednesday said its streaming business lost far less money in the latest quarter than it did in previous periods, but reported that its flagship Disney+ streaming service lost domestic subscribers for the second quarter in a row.
The company also raised prices on its Hulu Live television packages and announced the launch of a new bundle known as the Duo Premium, which pairs Disney+ and Hulu without ads for $19.99 a month. Previously, the company had offered both services as stand-alone products, or bundled with ESPN+ for the same price.
Wednesday’s price increases, which take effect in October, mean that the monthly cost of the ad-free stand-alone version of Disney+ has doubled to $13.99 from its 2019 introductory price of $6.99. The price of Disney’s ad-free Hulu service will rise to $17.99 from $14.99, making it more expensive than the most popular ad-free version of Netflix or Warner Bros. Discovery’s Max streaming platform.
The cost of the ad-supported versions of Disney+ and Hulu won’t change in the U.S., Iger said. “Maintaining access to our content for as broad an audience as possible is top of mind for us,” he said.
The changes come as Disney struggles to pivot from its old model of distributing content in movie theaters, on network and cable television and through the sale of physical media to a streaming-first paradigm.
Since launching Disney+ in late 2019, the company has lost more than $10 billion in its direct-to-consumer segment, which also includes Hulu and ESPN+. And for much of the past year, Disney’s shares have traded below $100 as investors have grown impatient with media companies such as Disney that have spent heavily to acquire subscribers without giving priority to profit.
In March, Iger said that in its “zeal to grow global subs,” the company had underpriced its streaming services and hinted that higher prices were coming. In December, after the company launched its first-ever ad-supported tier for Disney+ and raised prices on the ad-free version by $3, the low level of cancellations indicated that there was room to raise prices further without reducing demand, Iger said.
Earlier Wednesday, Disney reported that losses in its streaming business narrowed to $512 million in the third quarter from $1.06 billion in the year-earlier period.
The improvement is a sign that cost controls put in place by Iger are starting to show a positive effect: Wall Street analysts polled by FactSet had expected a quarterly loss of $758 million.
Overall, Disney’s revenue rose 3.8% to $22.3 billion, thanks in part to continued growth at the company’s parks business, while operating income remained flat at around $3.6 billion. Analysts surveyed by FactSet had projected revenue of $22.5 billion and operating income of $3.3 billion.
In a statement, Iger said Disney was on track to exceed the goal he laid out in February of cutting $5.5 billion from content and administrative budgets, and chalked up the results to efforts to restructure the company and improve efficiencies. Since the start of the year, Disney has eliminated thousands of jobs as part of an effort to reduce head count by 7,000.
“In the eight months since my return, these important changes are creating a more cost effective, coordinated, and streamlined approach to our operations,” he said. “While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory.”
Shares of Disney slid 1.4% in after-hours trading to $86.20. Before the earnings results, the stock had fallen 19% over the past 12 months.
The company swung to a loss of $460 million from $1.41 billion a year earlier, mostly because of restructuring and impairment charges. Excluding certain items, Disney earned $1.03 per share outstanding, beating analyst expectations of 97 cents a share.
Disney+ had 146.1 million subscribers globally, 7.4% fewer than the 157.8 million it had in the previous quarter. The decline mostly came from India, where Disney last year lost the rights to stream a popular cricket league that had been a major driver of new sign-ups.
In the U.S. and Canada, Disney+ had 46 million subscribers, down from 46.3 million in the previous quarter. It marked the second time ever that the company saw Disney+ lose North American subscribers.
The company’s parks business generated $8.33 billion in revenue, a 13% increase from a year earlier. The company said growth at its international parks offset lower results domestically.
Disney’s troubled traditional television business continued its decline. The company’s so-called linear TV segment, which includes sports network ESPN, ABC and cable channels like FX, Freeform and the Disney Channel, saw operating income fall 23% to $1.89 billion, or about $100 million less than what analysts expected.
Once a reliable engine of profit for Disney, linear TV has seen its operating income plunge in recent years as more consumers cut the cable cord and switch to streaming video as their primary source of home entertainment.
Iger recently hired Kevin Mayer and Tom Staggs, both former top lieutenants to Iger, as consultants to advise him on the TV business.
Disney is exploring a menu of options for both ESPN and its other linear networks, which include ABC and cable channels such as Freeform and Disney Channel, people familiar with the matter said. Those options could include selling some networks or bringing on equity partners, or spinning some assets off into a new company. News of Mayer’s and Staggs’s advisory roles was earlier reported in Puck’s media newsletter.
In recent weeks, Iger has told associates that he wants to reduce Disney’s exposure to the declining cable-TV industry but would prefer to avoid a spinoff of ESPN, and instead attract strategic partners to raise capital and ease the pressure on the business, people who have spoken with him said.
Source: https://www.msn.com/en-us/money/companies/disney-to-significantly-raise-prices-of-disney-hulu-streaming-services/ar-AA1f13kX?ocid=BingHp01&cvid=9b97046f42e64bf3c1e7d6a80e974574&ei=48
For the second time in about a year, Disney announced a round of major price increases to its streaming products, raising the cost of the ad-free versions of Disney+ and Hulu by double digits. The company also vowed to crack down on password-sharing, an effort that streaming rival Netflix started in earnest earlier this year.
“We are actively exploring ways to address account sharing and the best options for paying subscribers to share their accounts with friends and family,” Disney Chief Executive Robert Iger told investors during a conference call to discuss the company’s latest results.
The price increases come as the company earlier Wednesday said its streaming business lost far less money in the latest quarter than it did in previous periods, but reported that its flagship Disney+ streaming service lost domestic subscribers for the second quarter in a row.
The company also raised prices on its Hulu Live television packages and announced the launch of a new bundle known as the Duo Premium, which pairs Disney+ and Hulu without ads for $19.99 a month. Previously, the company had offered both services as stand-alone products, or bundled with ESPN+ for the same price.
Wednesday’s price increases, which take effect in October, mean that the monthly cost of the ad-free stand-alone version of Disney+ has doubled to $13.99 from its 2019 introductory price of $6.99. The price of Disney’s ad-free Hulu service will rise to $17.99 from $14.99, making it more expensive than the most popular ad-free version of Netflix or Warner Bros. Discovery’s Max streaming platform.
The cost of the ad-supported versions of Disney+ and Hulu won’t change in the U.S., Iger said. “Maintaining access to our content for as broad an audience as possible is top of mind for us,” he said.
The changes come as Disney struggles to pivot from its old model of distributing content in movie theaters, on network and cable television and through the sale of physical media to a streaming-first paradigm.
Since launching Disney+ in late 2019, the company has lost more than $10 billion in its direct-to-consumer segment, which also includes Hulu and ESPN+. And for much of the past year, Disney’s shares have traded below $100 as investors have grown impatient with media companies such as Disney that have spent heavily to acquire subscribers without giving priority to profit.
In March, Iger said that in its “zeal to grow global subs,” the company had underpriced its streaming services and hinted that higher prices were coming. In December, after the company launched its first-ever ad-supported tier for Disney+ and raised prices on the ad-free version by $3, the low level of cancellations indicated that there was room to raise prices further without reducing demand, Iger said.
Earlier Wednesday, Disney reported that losses in its streaming business narrowed to $512 million in the third quarter from $1.06 billion in the year-earlier period.
The improvement is a sign that cost controls put in place by Iger are starting to show a positive effect: Wall Street analysts polled by FactSet had expected a quarterly loss of $758 million.
Overall, Disney’s revenue rose 3.8% to $22.3 billion, thanks in part to continued growth at the company’s parks business, while operating income remained flat at around $3.6 billion. Analysts surveyed by FactSet had projected revenue of $22.5 billion and operating income of $3.3 billion.
In a statement, Iger said Disney was on track to exceed the goal he laid out in February of cutting $5.5 billion from content and administrative budgets, and chalked up the results to efforts to restructure the company and improve efficiencies. Since the start of the year, Disney has eliminated thousands of jobs as part of an effort to reduce head count by 7,000.
“In the eight months since my return, these important changes are creating a more cost effective, coordinated, and streamlined approach to our operations,” he said. “While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory.”
Shares of Disney slid 1.4% in after-hours trading to $86.20. Before the earnings results, the stock had fallen 19% over the past 12 months.
The company swung to a loss of $460 million from $1.41 billion a year earlier, mostly because of restructuring and impairment charges. Excluding certain items, Disney earned $1.03 per share outstanding, beating analyst expectations of 97 cents a share.
Disney+ had 146.1 million subscribers globally, 7.4% fewer than the 157.8 million it had in the previous quarter. The decline mostly came from India, where Disney last year lost the rights to stream a popular cricket league that had been a major driver of new sign-ups.
In the U.S. and Canada, Disney+ had 46 million subscribers, down from 46.3 million in the previous quarter. It marked the second time ever that the company saw Disney+ lose North American subscribers.
The company’s parks business generated $8.33 billion in revenue, a 13% increase from a year earlier. The company said growth at its international parks offset lower results domestically.
Disney’s troubled traditional television business continued its decline. The company’s so-called linear TV segment, which includes sports network ESPN, ABC and cable channels like FX, Freeform and the Disney Channel, saw operating income fall 23% to $1.89 billion, or about $100 million less than what analysts expected.
Once a reliable engine of profit for Disney, linear TV has seen its operating income plunge in recent years as more consumers cut the cable cord and switch to streaming video as their primary source of home entertainment.
Iger recently hired Kevin Mayer and Tom Staggs, both former top lieutenants to Iger, as consultants to advise him on the TV business.
Disney is exploring a menu of options for both ESPN and its other linear networks, which include ABC and cable channels such as Freeform and Disney Channel, people familiar with the matter said. Those options could include selling some networks or bringing on equity partners, or spinning some assets off into a new company. News of Mayer’s and Staggs’s advisory roles was earlier reported in Puck’s media newsletter.
In recent weeks, Iger has told associates that he wants to reduce Disney’s exposure to the declining cable-TV industry but would prefer to avoid a spinoff of ESPN, and instead attract strategic partners to raise capital and ease the pressure on the business, people who have spoken with him said.
Source: https://www.msn.com/en-us/money/companies/disney-to-significantly-raise-prices-of-disney-hulu-streaming-services/ar-AA1f13kX?ocid=BingHp01&cvid=9b97046f42e64bf3c1e7d6a80e974574&ei=48
