Even with price hikes looming for Disney+, CEO says it’s ‘underpriced’

Disney+ first launched three years ago at the “pretty ridiculous” low price point of $6.99 a month, CEO Bob Chuck admitted. Now the company is preparing to raise prices again on its main streaming device — but Disney+ still offers a better price/value equation than competitors, he said.

“I think we’re a lot underpriced for the value we’re offering,” Chuck said, noting that the ad-free Disney+ core service will continue to be priced lower than many competitors. The CEO was speaking Wednesday at Goldman Sachs’ 2022 Communacopia + Technology conference.

Amid rising inflation, Disney has announced price increases coming in the fourth quarter of 2022 for Disney + and Hulu, as well as a December launch of the ad-supported Disney + layer in Disney + Basic in the United States, the name of the plan with ads, to be launched December 8 in the US for $7.99 per month. This is the price of the current ad-free version of Disney+, which at that time will rise to $10.99 per month, an increase of 38%, and will be known as Disney+ Premium.

Networking emphasized that even once the cost of ad-free Disney+ rose to $10.99 a month, the media conglomerate still had plenty of room in terms of price hikes. “[W]We believe that our repercussions for higher prices… will be negligible,” he said.

Chabek said the new Disney+ ad tier “will really allow us to cater to the diverse needs of consumers.” He said Disney+ Basic will be “margin-neutral at worst” compared to the ad-free version, so the company is “indifferent” about which plan consumers choose. “This just puts the wind in our sales to achieve [projected Disney+ subscriber] “The numbers we mentioned,” said Chapek.

As of July 2, Disney counted more than 221 million subscriptions across Disney+, ESPN+, and Hulu. But on average, Disney generates much less revenue per streaming subscription than competitors like Netflix. Chabak said improving the operating profitability of its streaming portfolio is a priority.

Disney is looking towards a future “hard package” that will merge Disney+, ESPN+, and Hulu into one integrated service. To do this, Chuckle said, Disney would need complete ownership of Hulu; Comcast holds a 33% stake in the live broadcast. Comcast has the right to sell its Hulu stake to Disney as early as January 2024. As of July 2, 2022, Disney has registered Comcast’s stake in Hulu worth $8.6 billion, but Comcast will likely get billions more than that. “We’d like to get to that end point early,” said Chapek, but that a deal to buy 100% of Hulu is contingent on reaching satisfactory terms with Comcast.

Disney releases a strong earnings report for the June 2022 quarter, with a rebound in theme park revenue and net gains of 14.4 million Disney+ subscribers in the period, reaching 152.1 million as of July 2. The company lowered its common global target. for Disney+ to 215 million – 245 million global subscribers by the end of fiscal year 2024 (down from 230 million to 260 million previously), citing its loss of the Indian Premier League’s live-streaming rights as holding back Disney+ Hotstar’s growth in India. Subsequently, Disney Star recorded Indian television and digital rights for both the International Cricket Council (ICC) men’s and women’s world events from 2024 to 27. “We remain very optimistic about India,” said Chuck.

Disney has recharged its content pipeline after the COVID production slowdown. At its D23 fan conference over the weekend, Disney revealed a slew of first looks at upcoming movies and shows, including The Little Mermaid starring Halle Bailey, Avatar: The Way of Water, Indiana Jones 5, and the “Percy Jackson and the Olympians” series. and the “Iron Heart” series by Marvel Disney +.

“We have an embarrassment of fortunes in terms of the sheer amount of content we get from our creative engines,” Chubbak boasted. Film and TV productions still adhere to strict COVID safety protocols, which add costs, but Disney is evaluating how to cut production costs, according to Chapek.

Chuckle touched on Disney’s early plans to roll out a membership program, which would pool customer data from Disney+ with companies across the company, such as its theme parks. “Now we can customize and personalize an experience that is beyond our ability to do,” he said. Disney+ will become a “platform for interaction” with all of the company’s products and services, “not just a movie service.”

Shackle said ESPN will continue to distribute through pay-TV providers for the foreseeable future. As he said before, “at some point we see the writing on the wall” in terms of moving to break it up as a direct-to-consumer service with a full suite of sports software. He said, “We will not do something hasty… We will follow the consumer.”

Last month, activist investor Daniel Loeb of hedge fund Third Point urged Disney to separate ESPN and accelerate its acquisition of Comcast’s 33% stake in Hulu. But on Sunday, Loeb retracted his call for Disney to ditch ESPN, writing in a tweet, “We have a better understanding of the potential of @espn as an independent and another $DIS column to reach a global audience to generate ad and subscriber revenue.” Third Point owned approximately $1 billion in Disney as of mid-August.

tangle said diverse In an interview Saturday at D23 that “when word got out on the street that maybe Disney is going to get ESPN out, we had at least 100 inquiries from people wanting to buy it. What does that tell you? That means we’ve got something really good.”

Chuckle took over as Disney CEO in February 2020, succeeding Bob Iger. Disney’s board of directors earlier this summer renewed Entanglement’s contract until July 2025.

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