Disney will raise the price of its streaming services and pledged to restrict password sharing, the company said Wednesday when it released a mixed quarterly earnings report.
The increases will increase the monthly cost of ad-free Disney+ by $3, or roughly 27%, to nearly $14. The cost of ad-free Hulu will jump from $3 to nearly $18, a 20% increase that will make it more expensive than Netflix’s most popular ad-free tier.
Disney CEO Bob Iger acknowledged that the price hikes are intended to steer consumers toward cheaper versions of those services, whose subscription prices remain unchanged.
The streaming advertising market “is booming,” he said, noting that it’s healthier than traditional TV ads.
“Obviously with our pricing strategy we’re trying to migrate more subscribers to the advertising tier.”
Iger, who signed an extension to remain at the helm of the Mouse House until 2026, said he would address the issue of password sharing next year, echoing Netflix.
He also recognized the need to improve the quality of Disney movies, position the company’s flagship sports brand, ESPN, to stream directly to consumers and solve the problem. writers’ and actors’ strikes in Hollywood which have stopped a lot of film and television production.
Disney shares rose nearly 3% in after-hours trading as Iger reported a $1 billion improvement in operating income at the company’s streaming business over the past three quarters, which has to target profitability in 2024.
His turnaround plan for the media and entertainment giant has started to pay some dividends.
The company beat Wall Street profit expectations for its fiscal third quarter and said it was on track to cut costs by more than the $5.5 billion it promised investors in February.
“I returned to Disney in November and have agreed to stay longer, because there was more to accomplish before our transformation is complete,” Iger said, describing a “challenging short-term environment.”
However, Disney also reported quarterly revenue that fell short of expectations and fell slightly behind analysts’ projections for US Disney+ subscribers.
Disney’s revenue for the quarter ended July 1 rose 4% to $22.33 billion from a year earlier, just above Wall Street estimates, according to Refinitiv. It earned earnings per share of $1.03, excluding certain items, beating Wall Street projections of 95 cents per share.
The company took $2.65 billion in impairment and restructuring charges during the quarter, reflecting the cost of removing some content from its streaming services, terminating licensing agreements and $210 million in severance payments to dismissed workers
Disney’s Parks, Experiences and Products group reported a 13% increase in revenue for the quarter to $8.3 billion and an 11% increase in operating income to $2.4 billion.
Results were boosted by a rebound at Shanghai Disney Resort, which was open throughout the quarter compared to the same time a year ago, when COVID-19 forced the park to close for all but three
However, the unit had lower operating income at its national parks, due to declines at Walt Disney World Resort in Orlando.
The company has been embroiled in a bitter legal battle with Florida Governor Ron DeSantis after opposing the state’s “Don’t Say Gay” law, which caused Disney to lose its tax status special for the district that oversees the theme parks.
Disney’s traditional television business continued its decline. Higher sports programming production costs and lower affiliate revenues dragged down the performance of its cable channels. TV revenue fell 7% to $6.7 billion, while operating income fell 23% to $1.9 billion.
Disney said it narrowed losses at its streaming video services to $512 million in its fiscal third quarter from about $1.1 billion a year ago.
It added 800,000 Disney+ subscribers, 100,000 short of analyst estimates, and lost 12.5 million subscribers to the Disney Hotstar service in India, or nearly a quarter of its subscribers, as it gave up match rights of Indian Premier League cricket.
“Disney will have to lower prices from current levels in an effort to stimulate demand and defend its market share in an increasingly competitive industry,” said Jesse Cohen, senior analyst at Investing.com.
Disney’s direct-to-consumer business posted a 9% increase in revenue to $5.5 billion as the Average revenue per subscriber increased at Disney+ and Hulu.
Content sales and licensing, the unit that includes film and television sales, posted a deeper operating loss of $243 million in the quarter, compared with a loss of $27 million a year ago, as some movies disappointed, including the live-action remake of “The Little Mermaid.”
On Tuesday, Disney-owned ESPN announced that it has secured a lucrative deal to rebrand an existing sports betting app owned by Penn Entertainment as Bet ESPN. Penn Entertainment is paying $1.5 billion plus other considerations for the exclusive rights to the ESPN name and will continue to own and operate the betting application.
English 
Español de Venezuela