“Obi-Wan Kenobi”, “Lando”, “Ahsoka”, “Loki”, “Ms. Marvel”, “Moon Knight”, “Hawkeye”, “She-Hulk”, “Sister Act 3”, “Zootopia +” “Pinocchio”, “Hocus Pocus 2”, “Peter Pan and Wendy” and “Chip N ‘Dale: Rescue Rangers”.
Disney + raised the cost of its monthly subscription by $ 1 on Friday. The increase, which the company announced in December, brings streaming service in the United States from $ 6.99 a month to $ 7.99. The Disney package, which includes ESPN + and Hulu, will also increase by one dollar from $ 12.99 to $ 13.99.
A dollar might not sound like a lot, but it’s important to consumers who are running out of wallet space for every new streaming service that comes out.
But the price increase may be the first of many to come as the service and its extensive library of content continue to expand.
“The pricing strategy did what it was supposed to do”
When Disney (DIS) First announced the low price of Disney + in April 2019, there were audible gasps at their investor day presentation.
Analysts and media watchers were genuinely surprised that Disney’s new service, which hosts Star Wars, Marvel, Pixar, and all seasons of “The Simpsons,” cost about half the standard price of its biggest rival. . Netflix (NFLX).
However, thanks to that price, a cute baby who looked like Yoda, a founding father of rap, a witch who loves nostalgic television and a treasure trove of content from other brands, Disney + became a Goliath in the world of streaming.
The service surpassed the 100 million subscriber milestone in just 16 months, which exceeded all expectations. Disney’s streaming unit has also been a lifesaver for the company as the pandemic hit its businesses.
According to Andrew Hare, senior vice president of research at media firm Magid, that success gave Disney + “pricing power” where it could raise prices just a little over a year after its launch.
“Disney + has been enormously successful since its launch, I think beyond even the most optimistic believers of the product,” Hare said. “The pricing strategy did what it was supposed to do. It attracted a lot of people and almost immediately Disney + was a first-rate streaming competitor.”
But now things have changed. Disney’s goal is not to show that a traditional media company can adapt to the future of streaming. Like many of its other rivals in space, Disney’s new goal is to own a bigger slice of the streaming pie to challenge Netflix’s place at the top.
Price increases, even slight ones, can help you get there.
More more more
To stand out, streaming companies need content that is engaging and worth signing up for.
Disney has that with original hits like “The Mandalorian” and “The Falcon and the Winter Soldier,” as well as the content in its library.
It’s even funneling content to the service that was never intended for streaming. This is the case with the upcoming Marvel movie, “Black Widow.” That movie, which has been delayed due to the coronavirus, will hit theaters and Disney + for an additional fee in July. “Cruella,” a live action film about Cruella de Vil, and Pixar’s “Luca” will also be available on the service.
But streaming success is about more, more, more.
How much more? Well, Disney plans to spend between $ 14 billion and $ 16 billion on its streaming businesses in the next few years. That money has to come from somewhere. If Disney wants to meet its profitability projections in fiscal 2024, then raising prices is probably the best way to produce high-quality content that subscribers want while still being profitable.
So the $ 1 raise on Friday is probably just the beginning. However, that doesn’t mean you’ll have to break the bank for a Disney + subscription.
Hare believes there could be more price increases in the future for Disney +, but “it could also mean that consumers will cut back on other services to ensure they keep Disney + near the top of their paid services.”
“Disney + is likely still underpriced when considering fandom and content,” he said. “It is now a formidable and proven streaming service and will be able to wield pricing power in the future even as streaming competition becomes fiercer.”