Walt Disney Co. has announced that it will be increasing the price of its Disney+ streaming service by 38 per cent as part of a plan to generate more revenue for its money-losing online business and build on third-quarter results.
The media conglomerate disclosed that On Dec. 8, it would introduce an ad-supported version on Disney+ and raise the price of the ad-free option to US$11 a month. In addition, prices for some packages that include Hulu and ESPN+ will also increase.
Since its international launch, the company has added 14.4 million new subscribers in the third quarter, beating analysts’ estimates of 9.8 million.
In addition, Disney shares rose by as much as 7.1 per cent to US$120.40 in extended trading after the announcement.
However, many analysts have been sceptical that Disney could meet its ambitious fiscal 2024 target for up to 260 million subscribers, set two years ago.
According to BMA sources, Chief Financial Officer Christine McCarthy told investors that the company now expects between 135 million and 165 million Disney+ customers and as many as 80 million customers for the Disney+ Hotstar product by the end of fiscal 2024.
When Disney+ launched in November 2019, it included films and TV shows from its vast library and new series tied to company brands such as Marvel and “Star Wars.” The company has said it expects Disney+ to be profitable in fiscal 2024.
According to the broadcaster, introducing an ad-supported tier will boost subscribers and generate more revenue by giving customers options for how much they want to pay for the service.
Disney disclosed last month that it sold US$9 billion of ads for the upcoming TV season, with 40 per cent of that going to its online offerings.
Current Disney+ subscribers will receive the ad-supported version unless they agree to pay more for the commercial-free plan.