Ad-free subscription prices increased by Disney and Hulu while cracking down on password sharing

Stepping up in a bid to boost profitability, Walt Disney Co. is planning a price increase on its ad-free versions of streaming services Disney+ and Hulu set for October, according to information provided by the firm’s Chief Executive Officer, Bob Iger. Furthermore, the company is set to crack down on password sharing, with measures anticipated to be in place throughout next year.

The hike represents a roughly 27% increase to nearly $14 for the ad-free Disney+ and a 20% increase on ad-free Hulu to approximately $18. It is worth noting that this rise in price for Hulu makes it more costly than Netflix’s most popular advert-free tier.

Iger’s statement followed the company’s assessment of its fiscal third quarter ended on July 1, showing a mixed picture. For the third quarter, despite Disney posting a 4% rise in revenue, it also reported a significant net loss of $460 million. This is a drastic downturn from the prior year’s profit of $1.4 billion.

The streaming service Disney+ reported a dip in subscribers for both domestic markets, the United States and Canada, as well as internationally for the past two quarters consecutively. Internationally, it recorded a 7.4% drop in subscribers to 146.1 million from the second quarter’s total of 157.8 million.

Iger intimated that the price hikes aim to direct the consumers towards the less costly ad-supported tiers of these services, where prices remain steady. He stated, “We’re obviously trying with our pricing strategy to migrate more subs to the advertising-supported tier.”

While the tactic for curbing password-sharing hasn’t been clarified in detail, Iger suggested it could generate benefits for Disney in 2024. However, he revealed that this endeavour ‘might not be completed’ within that year and Disney’s expectations of how many password sharers may transform to paid subscriptions remain unknown, reported Manila Times.

Despite strides towards profitability, Disney’s latest strategies have met with scepticism. Analyst Paul Verna with Insider Intelligence expressed doubts over the efficacy of price hikes and curbing password sharing to guide Disney towards sustainable growth.

Disney’s current focus is a strategic reorganization, including trimming down about 7,000 jobs to conserve around $5.5 billion company-wide.

Disney, under the helm of Iger since his return last November, has been manoeuvring to readjust its streaming business whilst ensuring their theme parks’ success remains unscathed. As recognised by industry experts, Disney’s theme parks are a critical element of the company’s revenue. In response, Iger has prioritised reviving the faith of Disney theme park enthusiasts in the brand.

In other news, ESPN, a subsidiary of the Walt Disney Company, recently inked a profitable deal to rebrand a sports-betting app owned by Penn Entertainment as ESPN Bet. Penn Entertainment has agreed to pay $1.5 billion and additional considerations for exclusive rights to the ESPN name while retaining the app’s ownership and operation.