- Disney is jacking up the price of Disney+ and Hulu.
- Disney had underpriced its streaming offerings previously in pursuit of scale.
And there we have it.
Disney boss Bob Iger confessed a few months ago that the Mouse House had underpriced its streaming offering in its quest for subscriber growth.
Now, it's hiking prices for Disney+ and Hulu, with the ad-free tier for Disney+ going up from $10.99 a month to $13.99 per month. Hulu's ad-free tier will increase in price from $14.99 to $17.99.
The price of the ad-supported tier will remain the same, a move that will likely push more users to that tier, allowing Disney to sell ads against those audiences (and make more money per user).
The hike marks another nail in the coffin of the great streaming giveaway.
I wrote earlier today:
There's been a race between the major media companies to acquire users over the past several years, something you could describe as the "Netflix effect." Streaming services have been underpriced in the name of attracting critical mass. That's offered a great deal for consumers.
Think of it this way: I used to spend $15 to buy a single album on CD — often just to get access to one song. Now, I can pay $11 a month for Spotify and listen to hours of whatever I want wherever I want.
I also used to have to buy cinema tickets for my whole family to go see "Encanto." Now, I can watch it on demand for $13 a month, and also watch "Only Murders in the Building" on Hulu, and watch whatever sports are showing on ESPN+, thanks to a Disney bundle.
Sorry to break it to you, but that era is over. Spotify loses money offering that great deal. Disney loses money in streaming offering that great deal. Prices have to go up.
(You can read the rest of my article on the disruption in Hollywood right here.)
Disney reported smaller than expected losses in streaming last quarter, and has committed to getting the streaming business to profitability by 2024. It's going to do that by exercising pricing power and by scaling up its ad-supported streaming tier. Netflix is also raising prices, as is Spotify.
The sweet streaming deal is over.