One thing you can count on with the Walt Disney Company is constant price hikes. Last month, Disney raised the pricing on streaming services like Disney+, Hulu, and ESPN, and now they say more increases are coming. Because, of course, they are.
During their recent Q4 investment call, Disney CFO Hugh Johnston said they were going to raise prices in line with the “value” of their content. That’s an oxymoron.
“We certainly look to continue to increase pricing in line with the value that we’re providing to consumers. And a lot of the growth that we’re seeing right now is because of the exceptional content that’s coming out of both the movie and the TV studios that’s obviously our proprietary content. So, that’ll certainly enable us to increase pricing over time.”
Remember, they raised prices less than a month ago and are already planning more price hikes.
But why?
It’s simple: they make more money off of people on the ad-supported tier, which is funded by advertising. They cram so many ads in that I have literally sat through 13 commercials in one break on Hulu, and we pay for the “ad-free” tier.
Disney already says their ad-supported offerings have attracted 60% of the new subscribers compared to the 37% who go “ad-free” (which really isn’t ad-free.)
Many said that Disney lost to the cable companies, but they did not. They gained all those ad-supported tier customers, and they make way more money off of them than the ad-free people.
Disney CEO Bob Iger confirmed that the plan is to raise pricing and drive more customers to the ad-supported tier.
Bob Iger confirmed that they want more people on the ad-supported tier, saying,
“It’s not just about raising pricing; it’s about moving consumers to the advertiser-supported side of the streaming platform.”
Disney is going all in on as-supported content because they make more money from customers. They are even adding updates and features to force increased engagement for increased ad revenue. We know that they just added the Office of Technology Enablement to use AI to try to get more money out of customers, and it will likely be used heavily in streaming monetization and ad placement. The better the ads perform, the more money Disney can demand from advertisers.
We don’t know when price hikes will occur again, but Disney thinks they can raise rates on customers again. It sounds like they will at least target the ad-free tiers again.
When is enough enough?
What do you think? Comment and let us know!
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