Walt Disney Co. CEO Bob Iger has announced a planned price increase for its ad-free Disney+ and Hulu plans, as well as a crackdown on password sharing, with the aim of making its streaming services profitable. The price hike is expected to be implemented in October and will raise the monthly cost of ad-free Disney+ by approximately 27% to nearly $14. Similarly, the cost of ad-free Hulu will increase by $3 to nearly $18, surpassing the price of the most popular ad-free tier at Netflix.
Disney’s fiscal third-quarter earnings revealed a substantial net loss and a decline in customers in both domestic and international markets. The company reported a 4% increase in revenue but experienced a net loss of $460 million compared to a profit of $1.4 billion in the same period last year.
Although Disney’s streaming service, Disney+, reported narrower losses in the quarter, it lost domestic subscribers in the US and Canada for the second consecutive quarter. Additionally, it experienced a decline in international subscribers for the third consecutive quarter, mainly due to challenges in the Indian market.
Iger acknowledged that the price hikes are intended to encourage consumers to opt for cheaper ad-supported versions of the services, which will not be affected by the increase. He also mentioned that the advertising market for streaming is performing well and stated, “We’re obviously trying with our pricing strategy to migrate more subs to the advertising supported tier.”
Regarding the password-sharing crackdown, Iger did not provide specific details but projected potential benefits for Disney in 2024. The implementation of this strategy may not be complete by that time, and Disney is unable to predict how many password sharers will switch to paid subscriptions.
Some analysts remain skeptical about whether the price hikes and password crackdown can lead Disney back to sustainable growth. They argue that the company’s moves may not provide the clarity desired by investors regarding its streaming services and TV networks. Furthermore, while the narrowing of Disney’s streaming losses is promising, analysts believe it stems more from cost-cutting measures than organic growth, leaving uncertainty regarding the company’s long-term plan.
Amidst the efforts to revitalize Disney’s streaming business, Iger has also ensured the continued financial strength of its theme parks. Disney’s theme parks are regarded as a critical component of the company’s overall business. Iger has prioritized reconnecting with Disney theme park enthusiasts and rebuilding their trust in the brand.
In addition to these challenges, Iger has been navigating a legal battle with Florida Governor Ron DeSantis over the control of Disney World’s governing district. Disney sued DeSantis, accusing him of retaliatory actions after the company opposed a controversial law. Former high-level government officials have criticized the governor’s takeover, stating that it has caused significant damage to the state’s political, social, and economic fabric.
Despite these challenges, Iger recently announced that he will remain as CEO of The Walt Disney Co. until the end of 2026, giving the company time to identify his successor. Furthermore, Disney-owned ESPN revealed a lucrative deal to rebrand an existing sports-betting app as ESPN Bet, solidifying its presence in the growing sports betting market.