Whether you want to binge old episodes of “Dance Moms,” the kids can’t get enough of “Monsters at Work” or you have “Hamilton” on a loop, Disney+ has a lot to offer viewers of all ages.
As a steaming service, Disney+ earns top marks for family friendly entertainment. Changes are brewing, though. Disney Entertainment is increasing the monthly fee for plans without advertisements.
Here’s what’s in store for Disney+ subscribers — and for the viewers who have been piggybacking on paying customers’ accounts.
Disney+ Prices, Now and Soon
As a Disney+ aficionado, you have a number of subscription options from which to choose. Some standalone plans include advertisements that are embedded into the shows and movies, while others don’t. Or, you may want a bundled plan that includes different streaming companies, with both ad and ad-free options.
Depending on the plan, though, prices may be going up, starting October 12, 2023:
— Disney+ with ads: $7.99. No change.
— Disney+ without ads: from $10.99 to $13.99
— Duo Basic: Disney+ and Hulu with ads: $9.99. No change.
— Duo Premium: Disney+ and Hulu without ads: $19.99. No change.
— Trio Basic: Disney+, Hulu and ESPN+ with ads: from $12.99 to $14.99.
— Trio Premium: Disney+ and Hulu without ads, plus ESPN+ with ads: from $19.99 to $24.99.
A few dollars more each month may seem inconsequential on the surface, but the increase is significant. For example, if you select the Disney+ plan without ads and are accustomed to paying $10.99, the new fee of $13.99 represents a 27% hike.
Reasons for the Disney+ Price Adjustments
Even with Disney’s popular content, achieving a net gain has proved difficult. Subscriber acquisition has been an expensive and difficult endeavor, according to the company’s financial records.
In August 2023, Stourbridge Investments filed a complaint against Robert A. Chapek, Walt Disney’s former CEO, claiming that management attempted to conceal the staggering costs related to boosting subscriber numbers. Shareholders accused the company of deliberately deceiving investors regarding the financial health of Disney+ streaming services.
Disney had predicted that by 2024 Disney+ would have secured a minimum of 230 million subscribers, resulting in a profit. However, by the end of June 2023, the shortage was evident. Disney+ had just 146 million subscribers and a $512 million loss, according to the Stourbridge Investments complaint.
“The company has invested very heavily in streaming, but they lost billions,” says Seth Schachner, managing director of Strat Americas, a consultancy firm that provides guidance to media and technology partnerships.
“The focus now is how to make these things profitable. Raising prices on streaming is a good business strategy. So is offering bundles. With Hulu and ESPN, they will bring in more subscribers,” he adds.
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Disney Is Dealing With Streaming Competitors
In the entertainment subscription space, competition for paying viewers is intense. This is particularly true as people are tightening their purse strings amid recession and inflation fears.
A 2023 Deloitte survey found that 47% of consumers made a change to their entertainment subscriptions because of current economic conditions, such as canceling a service to save money, switching to a free ad-supported version of a service or bundling services.
In Q2 2023, Disney+ was the fourth most popular subscription streaming service. Amazon Prime Video held the top spot with 21% of the market share, and Netflix was a close second at 20%.
In Q1 of 2023, Disney+ had been in the third position, but Max (formerly HBO Max) took its place in Q2 and had 15% of the market share. Disney+ lagged, with 13% of the market share.
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Such shifts aren’t necessarily bad news, says Babar Khan Javed, director of public affairs at Z2C Limited, a media planning and buying agency in Pakistan.
Javed says that Disney is likely trying to steer users toward its ad-supported services, where the consumer affordability trade-off will occur. Disney also seems to be banking on subscribers staying on as paying customers, resulting in needed revenue.
“Previously, it was all about subscriber acquisition,” Schachner says. “Disney looked at price sensitivity for the premium tier and thought they can go higher and not lose subscribers. At the same time, streaming services are offering lower priced advertising supported tiers.”
According to Javed, Disney has nothing to lose by offering ad-free premium options. Because these plans do not require a team to manage and insert advertisements, which vary by region, they are less expensive. Therefore, it doesn’t hurt to have this alternative on the menu.
Choosing Between Plans With and Without Ads
Disney may not be trying to steer most consumers to the higher priced, ad-free plans but instead is most interested in making the lower priced plan look like a steal, thus attracting more subscribers, experts say.
“There is a trend of streaming services offering ad-free options but I believe they’re accepting that most people won’t go for it,” Javed says. “When looking at the difference in price, most people will decide to tolerate some ads.”
When analyzing whether you want to upgrade to the costlier, ad-free plan, consider the kind of content you and your family consumes most often.
“Imagine you’re watching ‘The Mandalorian’ and there’s a really tense scene,” Javed says. “You hear the sound of Darth Vader breathing, something important is just about to happen, and then an ad pops up. You won’t like that.”
If you’re usually watching action-packed shows and movies, it may be in your best interest to stay immersed in the show so the nail-biting scenes aren’t interrupted. In such cases, the ad-free plan will be worth the extra few dollars.
On the other hand, if you have Disney+ for the kids, the cheaper plan with shows broken up with occasional ads may be preferable. “It can even be a reason for a bathroom break or to refill a drink,” Javed says.
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Other Disney+ Streaming Changes: No More Password Sharing
When you enroll in a subscription plan you receive a password so you can start watching. The monthly fee goes to the company to cover all the expenses involved in operations. Password sharing — when consumers let other people use their accounts for free — gives the company no additional revenue.
“A lot of people use streaming services for free,” Schachner says. “It makes sense to crack down on passwords.”
In May 2023, Netflix began cracking down on password sharing, and Disney is following suit. In Disney’s Q2 earnings call, current CEO Bob Iger said the company would start monitoring password sharing and make every attempt to eliminate it.
Will stopping the freeloaders translate into more paying customers? Certainly that’s the intention, and it worked with Netflix, which added 5.9 million new subscribers in the three months after the company got tough on password sharing.
With the financial health of Disney+ on the line, ensuring that all users are paying for the service is a practical measure.
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Disney to Raise Disney+ Price for Ad-free Plan originally appeared on usnews.com
