Disney is implementing a price increase for its streaming service as part of CEO Bob Iger’s efforts to drive profitability. Starting in October, the monthly cost of Disney+ will rise by 27% to $13.99. Additionally, Disney plans to introduce an ad-supported subscription tier internationally, beginning at £4.99 in the UK. These changes come amidst a decline in paying subscribers for the streaming service.
During the three months leading up to July, Disney+ lost 11.1 million subscribers, bringing the total number of subscribers down to 146.7 million. While Disney+ experienced significant growth initially, it encountered its first drop in subscriber numbers in February, and the decline has continued since then.
However, Disney+ managed to reduce its losses to $512 million (£402 million), which is less than half of the losses reported during the same period last year. This reduction can be attributed to Mr. Iger’s cost-cutting measures, including plans to lay off 7,000 workers. Disney is investing significant funds in order to transform the streaming venture into a profitable business.
Recent quarterly results reveal that Disney spent $2.44 billion on removing shows and movies from its online services and terminating deals with outside producers. Mr. Iger announced that these cost-cutting efforts are expected to save more than the initial goal of $5.5 billion.
After an 11-month absence, Mr. Iger made a surprise comeback this year in response to shareholder dissatisfaction with the company’s performance under his successor, Bob Chapek. He has also been contemplating the future of Disney’s core linear TV, which saw a 23% decline in third-quarter profit. Mr. Iger hinted that channels like ABC, Disney Channel, and FX may not be central to the company’s future.
Since Mr. Iger’s return, Disney’s stock price has declined. The company’s latest Pixar film, Elemental, received mixed reviews and had a lackluster opening weekend at the box office, leading to concerns about the company’s ability to consistently produce successful films. However, Elemental managed to generate $400 million in box office revenue after its initial $30 million opening weekend.
Disney is also dealing with the ongoing Hollywood writers’ and actors’ strikes, which could potentially cause delays in future releases for box office hits and shows for its Disney+ streaming app.
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