Rosalind Evans
Disney’s chief executive, Bob Iger, has committed to increasing profitability for the company’s streaming platforms by confirming a price surge for ad-free Disney+ and Hulu subscriptions starting in October. Concurrently, a rigorous stance against password sharing will also be introduced, expected to span the following year.
The revised pricing will mean a 27% increment for Disney+, pushing it to nearly $14 monthly. Similarly, ad-free Hulu subscribers will see a 20% increase, making it roughly $18 monthly, surpassing Netflix’s most popular ad-free package.
Following Disney’s recent fiscal third-quarter results, which ended on July 1, the company revealed a substantial net loss, observing reduced clientele in local and global markets. Despite this, Disney closed the quarter with a 4% revenue increment. A significant net loss of $460 million was observed, contrasting with the previous year’s profit of $1.4 billion. After-hours trading saw Disney’s stocks increase by about 2.2%.
However, Disney+ saw a narrower margin of loss this quarter, even though the subscriber count in the U.S. and Canada dropped consecutively for two quarters. Internationally, the decline stretched to three quarters, significantly influenced by challenges in the Indian market.
Iger admits that the revised pricing aims to direct users towards the more affordable ad-inclusive plans, which remain at their current prices. He highlighted the thriving streaming ad market, commenting on its superiority over conventional TV advertising, and expressed Disney’s aspirations to convert more users to ad-supported plans.
Regarding password-sharing measures, Iger refrained from revealing extensive details but hinted at potential benefits surfacing in 2024, indicating the possibility of the initiative not concluding that year.
Several analysts, including Paul Verna of Insider Intelligence, are skeptical about Disney’s recent decisions. Verna emphasized investor concerns over the company’s strategic direction for its streaming and TV platforms.
Disney’s streaming profit margin improvements are mainly due to significant cost reductions rather than genuine growth. This prompts concerns regarding Iger’s long-term vision for ensuring Disney’s stability.
Disney is undergoing a pivotal strategic overhaul, which involves a reduction of around 7,000 jobs to conserve approximately $5.5 billion across all sectors.
Iger, who reclaimed his CEO position from Bob Chapek last November, has been instrumental in rejuvenating Disney’s streaming sector while ensuring the unwavering profitability of its theme parks. Recognizing the importance of these theme parks to Disney’s overarching business strategy, Iger has emphasized rekindling relationships with loyal visitors.
Among the challenges faced by Iger was an alleged takeover attempt of Disney World’s park district by Florida’s Governor, Ron DeSantis. Disney’s lawsuit against DeSantis accuses him of retaliation following the company’s opposition to a controversial law. Recent developments have seen various officials criticizing DeSantis’s actions.
Last month, an announcement confirmed Iger’s CEO position at Disney until the close of 2026, backed by a two-year contract extension.
In related news, ESPN, a Disney subsidiary, recently unveiled a partnership with Penn Entertainment to rebrand a sports-betting app named ESPN Bet. The $1.5 billion deal provides Penn Entertainment with exclusive branding rights while retaining ownership and operations of the app.
Disney’s strategic shifts and partnerships, particularly in the streaming and theme park sectors, underline its commitment to evolving with market demands while preserving its legacy and iconic status. With Bob Iger at the helm until 2026, stakeholders and fans will watch closely as the company navigates the challenges and opportunities of the digital age, maintaining its position as a global entertainment titan.
