Disney+ : l’augmentation tarifaire, une décision trop excessive ?
Walt Disney’s popular streaming service, Disney+, is set to become even more expensive for ad-free viewing. The media giant is increasing the premium subscription rate by $3, bringing it to $13.99 per month in October. This 27% increase follows a previous $3 hike in December. While other streaming services have also raised their prices this summer, Disney’s increase is particularly significant, as it will make Disney+ 75% more expensive than it was just a year ago. This move could potentially help make the platform profitable, but it also runs the risk of driving subscribers away.
Making your streams come true
This summer has seen a series of price increases from major media companies. Paramount Global raised the price of Paramount+ by 20% in June, followed by Comcast boosting the price of Peacock Premium by the same percentage a month later. Now, it’s Disney’s turn to raise prices in August.
Although a $3 increase may not seem like much in terms of family budgeting, it is a riskier move compared to last year’s hike. Since that increase, Disney+ has experienced consecutive declines in domestic subscribers. It’s hard to imagine what a 75% price increase in less than a year will do to customer churn. For those who were already considering canceling their subscription after the last increase, this might be the final push they need. Let’s explore why this timing is problematic for Disney.
Content costs and quality
Disney expects to achieve $3 billion of the $5.5 billion in annual cost savings by reducing content costs. This means that Disney+ will likely have less new programming compared to before. Additionally, the company recently took an accounting hit due to removing existing content from the service. Subscribers will now be paying more but receiving less in return.
Furthermore, the ongoing strikes by writers and actors will soon have an impact on the availability of new projects. As the pipeline of current projects narrows, viewers can expect fewer options for new content.
Economic factors and rising prices
While the economy has shown resilience, many economists predict a recession in the near future, possibly next year. With rising prices across various ad-free services, including Disney’s majority-owned Hulu, viewers will need to be more proactive in managing their subscriptions. For some families, Disney+ is essential, but for those who only use the app to watch specific shows like The Mandalorian, it might be more cost-effective to cancel the subscription for most of the year and save the additional $125.
Image source: Disney.
Park place
Disney seems to be employing the same strategy with its streaming services as it does with its theme parks: increasing prices while aiming to make more money with fewer customers. Despite fewer visitors to Disney World due to the pandemic, the company has reported a 21% increase in revenue for its Florida resort during the third fiscal quarter compared to the same period in 2019, with adjusted operating income up 29%.
On paper, this move could finally make Disney+ profitable. CEO Bob Iger intends to achieve profitability by the end of fiscal 2024. The latest earnings report shows progress, with the operating loss for the segment halved compared to the previous year. If all of Disney’s 46 million domestic users pay an extra $3 per month, it would offset more than 80% of the recent quarter’s loss. However, it’s never as straightforward as it seems.
While there are cheaper ad-supported options for Disney+ subscribers and discounted promotional offers for theme park tickets, the company is playing a risky game. Losing customers could have a significant impact on its brand reputation.
Source : www.fool.com
