You can’t say you didn’t see this coming. Walt Disney, that shrewd operator, has upped the ante again, much like a riverboat gambler who’s just won a few hands and feels the urge to raise the stakes. The flagship Disney+ platform with ads will now cost $11.99 a month, up from $9.99. For the ad-free version, it’s a leap from $15.99 to $18.99. Prices are also climbing for many-though not all-of the bundles that pair Disney+ with Hulu and ESPN. A mere pittance, one might think, but in the grand scheme of things, it’s a 20% hike for the ad-supported version and a 19% bump for the ad-free. A small sum, but when you’re dealing with the likes of Disney, even a penny is a mountain.
Disney+ launched just six years ago at a price point of $6.99 a month when it was available only as an ad-free platform. Some groups, including Disney credit card holders, D23 members, and theme park pass holders, were able to lock in multiyear deals for as little as $4.99 a month. The price for that Disney+ Premium service today has roughly tripled. It adds up, even before it started to ad up. A curious thing, this relentless march of prices-like a man chasing a train, only to find it’s already left the station.
Stream weaver
Will subscribers pay up? A question as old as the hills, and one that investors must ponder, especially when the streaming business is the lifeblood of Disney’s operations. With 183 million Disney+ and Hulu subscribers at the end of June, the direct-to-consumer division is raking in billions, tripling the revenue of its legacy networks. A remarkable feat, if you can call it that. The operating profit for Disney’s linear networks was double the streaming operations, but these are passing ships. The 6% year-over-year increase in revenue on the streaming side was more than enough to offset the 15% slide for the linear networks. Disney+ and its other streaming offerings weren’t even profitable until a year ago, and the difference over the past year offset the sharp decline in operating profit for its legacy networks.
The migration to streaming is finally working financially for Disney. A price hike would boost the bottom line even more, as long as churn doesn’t spike. The dramatic hike in subscription rates next month in an iffy economy is a gamble. It also comes following nearly a week of folks calling for a boycott in light of the suspension of Jimmy Kimmel Live! The suspension ended on Tuesday night, with the show returning to most ABC affiliates. In a clever close to the show’s opening monologue-sure to delight Disney investors-a tearful Kimmel pulled a sheet out of his pocket, explaining that Disney wanted him to read one thing in exchange for the return of the show. Instead of an apology or boilerplate legalese, Kimmel read the instructions to reactivate canceled Disney+ and Hulu subscriptions. A masterstroke, if you’ll pardon the pun.
Disney’s streaming hikes were not across the board. Some options remain the same. In a surprising twist, come Oct. 21, it will still cost subscribers to the Disney+ and Hulu bundle without ad breaks $19.99 a month, just a buck more than the same package with Disney+ alone. A $4 difference today. Netflix introduced an ad-supported tier three years ago, and a few months later, it suggested the ad revenue it was generating from the cheaper plan was enough to offset the $8.50 monthly difference between the plans. The news led to an increase in demand for streaming service stocks and connected-TV advertising players. Disney’s new pricing implies that the entertainment stock bellwether is changing its approach.
The Disney+ and Hulu bundle with ads option will go from $10.99 to $12.99 a month in October. The $9 monthly gap between the ads and the ad-nots is narrowing to $7 next month. Is Disney trying to get ahead of a potential softening in the economy that could hurt the connected-TV advertising market, or is this just a tactical move to get subscribers back to the higher-priced ad-free option? Is this just a way to blur the potential subscriber hit that may have taken place over the past week if those who canceled don’t come back? Disney just became even more interesting for the quarter ahead. 💵
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2025-09-24 19:24