First U.S. Disney+ Price Hike Kicks In March 26
- by Karlene Lukovitz @KLmarketdaily, March 25, 2021
Nearly 17 months after what’s proved to be a phenomenally successful launch, Disney+ is implementing its first price increase in the U.S.
The streaming service — which this month surpassed 100 million global subscribers, and is now projecting 230 million to 260 million by 2024 — is raising its monthly U.S. subscription fee by $1, to $7.99, as of March 26.
The annual price will increase from $69.99 to $79.99, and the Disney+ bundle (Disney+, Hulu and ESPN+) that has been a key growth-driver for the SVOD will also increase by $1, to $13.99.
With its pricing still considerably lower than Netflix ($8.99 for its basic plan) and HBO Max ($14.99), Disney is betting that a small price hike won’t slow its growth or erode its existing subscriber base.
Disney gave consumers time to absorb the shock by announcing the hike well in advance, last December.
And while consumers aren’t known for embracing even small price increases, Disney is using it as an opportunity to goose signups by locking in the current price for annual subscriptions registered before March 26, a $10 savings.
Disney implemented higher Disney+ prices in Canada in February, upping the monthly fee from C$8.99 to C$11.99.
The company also upped the service’s price in the U.K.(from £5.99 to to £7.99) and Europe (from €6.99 to €8.99) last month.
These price hikes are designed to help address the one point of concern about Disney+, from investors’ standpoint: Its average revenue per user (ARPU) declined 28% in its most recent quarter, from $5.56 to $4.03.
Disney acknowledged that this reflects low pricing in India and Indonesia. Through the rebranding of Hotstar to Disney+ Hotstar, those regions have come to account for about 30% of total global Disney+ subscribers (more than 28 million in India alone).
Disney acquired Hotstar as part of its 21st Century Fox acquisition in 2018, and raised its premium-tier pricing from the equivalent of $13 U.S. to $20 when it relaunched the service in April 2020. But the lowest-rung tier costs just over $5 for a year, according to Android Authority.
In February, when Disney reported its fiscal Q1 results, analyst firm MoffettNathanson estimated that Disney+ Hotstar subscribers had an average ARPU of under $1.
In December 2020, CFO Christine McCarthy said that Disney+’s subscriber growth projections assume that about 30% to 40% will come from Disney+ Hotstar. That means more than 100 million subscribers paying under $1 per month by 2024.
CORRECTION: Netflix's basic plan is $8.99 - not $13.99
Will be interesting to see how long Disney+ can grow and just as importantly, retain customers. Once you binge on Disney or Marvel movies, there's not a variety of new programming available like the viewer gets on competing platforms.
Dan, for a cord cutter who opts for Disney+ everything that its broadcast TV network puts out daily in all dayparts, as well as its stations' local news, plus sports,specials etc, and all of its cable channel content is "new". The number of "original" movies or series is not the deciding factor---though it's a standard way to hook streaming service subscribers. Once hooked the originals will probably account for only about 20% of their total time spent with the service--maybe less. That's also true of Netflix, except, now, many of its off-network rerun shows, which attracted so much of its viewing tonnage are no longer available to Netflix-only subs.
"...for a cord cutter who opts for Disney+ everything that its broadcast TV network puts out daily in all dayparts, as well as its stations' local news, plus sports,specials etc, and all of its cable channel content is "new".'
Disney+ does not offer ABC shows from all dayparts, nor does it offer local programming.
We had it for three months - watched a ton of marvel movies and old disney movies, a few documentaries and then didn't watch anything for two months before we cancelled. There seems to always be something new on Netflix and the algorithm of suggesting programming is getting better.
Disney+ has a long way to grow and get new customers on a global scale, but unless there's a decent influx of new programs, you can only project that retention past a certain threshold will be a challenge.
Many thanks for your "clarification" Dan. However, it's my understanding that Disney offers various bundles---not just Marvel movies and old Disney films---so you must have picked a bad one. I'm not a subscriber but if I were, I'd probably consider the one that includes Hulu and ESPN---I don't think that all you get is old Disney movies with that one---but I could be wrong. Also, does it make sense for Disney to exclude its own broadcast TV network and cable channels plus local stations when its rivals, NBC and Viacom/CBS are bringing their own counterparts to streaming---again in various bundles?
I was a subscriber and when you add Hulu+ without ads, you're up to almost $20 a month. None of these articles ever outline how many subscribers are paying for the cheapest, basic plan and how many subscribers go for the whole bundle. $15 a month to watch Disney flicks and Hulu with commercials is a lot of $$$ comparatively speaking. $20 a month for no ads (but you get them on ESPN), no thanks.
Unless you have something contradictory, we don't see people lining up to download NBC or CBS plans.
Context (and content) matters.
Dan, my point was that Disney+ is offering a much broader portfolio of content---national and local--- than just old movies.
By the way, I agree with you about how difficult it is for a consumer to wade through all of the BS and figure out what to buy---but a lot seems to be available. As for the price, if I were a cord cutter who objected to having to pay for many channels I ---or my family---dont watch---and I needed to save money---I would probably buy only two of the four or five services offered by the various broadcast TV/cable entities, not all of them. Even if that cost me $40 per month, I'd be saving $60-70---some of which might be spent on one or two ad-free SVOD services. That way I would get only two sets of local stations, not five, maybe 40-not 130---cable channels, plus national fare from two large TV networks---not four, plus a Netflix ---which should be enough to satisfy me and my family---if I make sound choices.
The basic plan we are now seeing unfolding---will feature the various TV entities competing largely with eachother---more so than with Netflix---for a share of subscribers and time spent usage.. But none of these services has to attain super high penetration levels to be profitable because much of their program content will be funded by "linear TV' or AVOD ad dollars. It will be most interesting to watch how it all unfolds.