Disney is set to unveil a new pricing structure that will include an advertising-supported Disney+ as part of the company's effort to make its streaming platform profitable.
Disney to Launch Ad-Supported Tier
According to CNET, beginning Dec. 8, Disney+ with ads will be available in the US for $7.99 per month. This is the current price of the service without any ads.
The price of ad-free Disney+ will increase by 38%. This means customers will be paying $10.99, a $3 per month increase.
Hulu, a streaming service under Disney, will also be increasing its monthly subscription fee. The subscription without ads will increase by $2 per month, from $12.99 to $14.99, starting Oct. 10.
Meanwhile, Hulu with ads will increase by $1 per month, from $6.99 to $7.99.
In July, Disney announced that its other streaming service, ESPN+, would increase its prices too. The service with ads will go up 43%, which is $9.99 per month.
The price increases reflect the growing operating loss of the streaming services of Disney: Hulu, ESPN+, and Disney+ combined.
All three streaming services are expected to lose $1.1 billion in the fiscal third quarter, which is $300 million more than the average analyst estimate.
The price increases are expected to cover the high cost of content on the services.
According to CNBC, even though Disney added 15 million new Disney+ subscribers in the past three months of 2022, which is 5 million more than analysts estimated, the company still suffered an operating loss.
Disney has previously stated that it plans to lose money on its streaming service until 2024.
Christine McCarthy, the CFO of Disney, reiterated on the earnings conference call on Wednesday, Aug. 10, that the streaming service's losses will peak during the company's fiscal 2022.
The average revenue per user for Disney+ decreased by 5% in the quarter in the US and Canada because more customers are signing up for multiproduct offerings as they are a lot cheaper.
Overall, the company's quarterly results, also announced on Wednesday, Aug. 10, beat analysts' expectations on the top and bottom lines.
Disney+ subscriptions increased to 152.1 million during the most recent period, which is much higher than Wall Street's projection of 147 million.
Counting the subscribers of Disney+, Hulu, and ESPN+, the company has 221 million users in total.
Bundled Pricing of Disney
Disney also announced new bundle prices incorporating Disney+ with ads, according to USA Today.
A bundle of Disney+ without ads and Hulu and ESPN+ with ads will increase by $1, going from $13.99 to $14.99 a month. But this will affect existing customers only.
The price of a bundle of Disney+, Hulu, and ESPN+, all with ads, will be $12.99, or $1 lower than the current bundle price. Customers can also sign up for a Disney+ and Hulu bundle for $9.99 per month with ads.
The price for Disney+ without ads, Hulu without ads, and ESPN+ will remain $19.99 monthly.
Hulu with live TV bundles will also have new pricing. Subscribers who want to have Hulu with live TV and Disney+, Hulu, and ESPN+ ads will pay $69.99 monthly.
For existing customers, Disney+ without ads in that said bundle will cost $74.99. Meanwhile, the bundle of Hulu without ads, Hulu with live TV, and Disney+ will cost $82.99 a month.
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Written by Sophie Webster
