The Walt Disney Company’s CEO, Bob Iger, has outlined a plan to make its streaming services profitable. This includes a planned price increase for its ad-free Disney+ and Hulu plans, as well as cracking down on password sharing. The price hikes will raise the monthly cost of ad-free Disney+ by $3, or approximately 27 percent, to nearly $14. Similarly, the cost of ad-free Hulu will increase by $3 to almost $18, making it more expensive than Netflix’s most popular ad-free tier.
Iger’s announcement comes after Disney reported mixed earnings for its fiscal third quarter. While the company reported a 4-percent increase in revenue, it experienced a substantial net loss of $460 million. Additionally, Disney lost customers in both domestic and international markets.
Despite reporting narrower losses for Disney+ in the quarter, the streaming service lost subscribers domestically for the second consecutive quarter. Internationally, it also experienced a decline for the third straight quarter, with a 7.4-percent decrease in customers. These numbers contribute to a total loss of 4 million streaming subscribers in the second quarter.
To drive consumers toward cheaper ad-supported versions of their services, Disney plans to increase the prices for their ad-free plans. Iger believes the advertising market for streaming is growing, making it a healthier option than traditional TV advertising. The aim is to migrate more subscribers to the ad-supported tier.
While these changes are intended to improve Disney’s streaming business, some analysts remain skeptical about their ability to lead the company to sustainable growth. They argue that the improvements in streaming losses are primarily due to cost-cutting rather than organic growth.
In an effort to streamline operations and save costs, Disney is in the midst of a strategic reorganization that includes cutting approximately 7,000 jobs, resulting in a $5.5 billion savings across the company.
Additionally, Iger has focused on reconnecting with Disney theme park enthusiasts and rebuilding their trust in the brand. He has implemented changes at U.S. parks and is actively protecting Disney World’s theme park district from a takeover by Florida Governor Ron DeSantis.
Moving forward, Iger’s contract has been extended through the end of 2026, giving Disney some breathing room to find his successor. The entertainment and theme park company continues to seek opportunities for growth, such as the recent deal with ESPN to rebrand an existing sports-betting app as ESPN Bet.
In conclusion, Disney is taking steps to make its streaming services profitable, including price increases and cracking down on password sharing. While the company faces challenges in its streaming business, it is making efforts to streamline operations and protect its theme parks.
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