Disney hikes streaming fees after huge losses

• Disney+ with advertisements will cost $7.99 per month starting December 8.
• Disney’s streaming services collectively lost $1.1 billion in the third quarter of their fiscal year.
• The average revenue per user in the U.S. and Canada fell by 5% during the quarter.

In an effort to turn its streaming service profitable, Disney revealed a new pricing scheme that includes an advertising-supported Disney+.

Disney+ with advertisements will cost $7.99 per month beginning on December 8 in the US, which is the same as Disney+ without advertisements. Disney+ will cost $3 more per month, or $10.99, after a 38% price increase.

Starting on October 10th, the cost of Hulu without advertisements will increase by $2 per month from $12.99 to $14.99. The monthly price of Hulu with advertisements will increase by $1 to $7.99.

Disney stated last month that the monthly cost of ESPN+ with advertisements would increase 43% to $9.99.

The price hikes are a reflection of Disney’s streaming services’ expanding operating losses. Due to the greater cost of content on the services, Disney+, Hulu, and ESPN+ collectively lost $1.1 billion in the third quarter of their fiscal year, which was $300 million more than the average analyst projection.

Even while Disney attracted nearly 15 million new Disney+ customers in the quarter—roughly 5 million more than analysts had predicted—the operational loss worsened.

In the past, Disney has said that it expects to lose money on Disney+ until 2024. Disney+ losses will reach their height in the company’s fiscal year 2022, according to Chief Financial Officer Christine McCarthy, who confirmed this during the results conference call on Wednesday.

Due to more users choosing cheaper multiproduct options, Disney+’s average revenue per user in the U.S. and Canada fell by 5% during the quarter.

The company’s quarterly earnings, which were also released on Wednesday, outperformed forecasts on both the top and bottom lines. In the most recent period, Disney+ subscriptions increased to 152.1 million, exceeding Wall Street’s forecast of 147 million.

In total, Disney has 221 million streaming customers when ESPN+, Disney+, and Hulu are included.

Pricing bundles

Disney also unveiled new pricing bundles that include its Disney+ service and ads.

A combo of Disney+ without commercials and Hulu and ESPN+ with advertisements will go up from $13.99 to $14.99 for current users alone.

A package of Disney+, Hulu, and ESPN+ with commercials will cost $12.99, which is $1 less than the cost of the existing Disney bundle.

A Disney+ and Hulu bundle with advertising will be available for purchase from consumers for $9.99 per month. That represents a saving over purchasing Disney+ and Hulu with ads separately.

Disney+ and Hulu without advertisements, along with ESPN+, continue to cost $19.99 per month.

Disney’s Hulu with live TV bundles will also have new prices. Customers who want Disney+, Hulu, and ESPN+ with advertisements will pay $69.99 per month for Hulu with live TV.

Disney will sell that bundle, which includes Disney+ without advertising, to current users for $74.99. The monthly cost of the premium Hulu with live TV, Disney+, and Hulu ad-free package is $82.99.

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