Disney (DIS) hiked the prices of its various subscription plans on Thursday, highlighting a trend that’s gained traction over the past year as media companies focus on improving profitability.
Disney first announced the price hikes in August, revealing increases across its various Disney+ and Hulu plans, with these changes set to take effect alongside the Disney+ debuts of Marvel’s “Agatha All Along” and Pixar’s “Inside Out 2.”
Most plans will see subscription costs rise by $1 to $2 per month. Hulu Live TV plans will see more sizable increases, rising by $6 a month.
The price increases come as Disney aims for sustained profitability in its streaming business, which just turned a profit for the first time in the quarter ended June 29. The company also plans to add new features to the Disney+ app like access to ABC Live and a playlist of content catered toward young children.
“Every time we’ve taken a price increase, we’ve had only modest churn from that,” Disney CEO Bob Iger said on the company’s fiscal third quarter earnings call in August. “Nothing that we would consider significant.” He added the goal for streaming is “to grow engagement on the platform,” hence the new features and bundling opportunities.
Other streamers have adopted similar strategies. Prior to Disney’s announcement, Comcast’s (CMCSA) flagship streaming service, Peacock, implemented price hikes in July, just ahead of the 2024 Paris Olympics, after it upped prices for the first time the previous summer.
And in June, Warner Bros.’ (WBD) Max streaming platform raised prices for its ad-free streaming plans, also ahead of key programming: the second-season debut of its blockbuster “Game of Thrones” prequel, “House of the Dragon.”
But Wall Street analysts have cautioned that continued increases could lead to more subscribers canceling their plans, with churn rates hovering at elevated levels.
“The prices for subscriptions without advertising are starting to go through the roof,” Bank of America analyst Jessica Reif Ehrlich previously told Yahoo Finance. “As a result, our view is that consumers will drop several streamers and maybe rotate a little bit more depending on the content cycle.”
To combat fickle consumers, competing platforms are now bundling their services together. As WBD CEO David Zaslav told investors in May, “There’s more strength together.”
Meanwhile, password-sharing crackdowns have become a popular choice in the race to secure profits despite recent frustration from consumers.
Disney+ launched the practice in the US and other regions last month, offering households the option to add an “outside” extra user at a discounted rate.
The crackdown echoes the strategy of Netflix (NFLX), which began implementing its password-sharing crackdown for US subscribers last May after first announcing the initiative in October 2022. WBD’s Max has also joined in on the trend, revealing it will crack down on account-sharing later this year.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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