Disney to hike price of Disney+, Hulu despite beating earnings expectations
Disney announced it will jack up the price of its popular streaming services — including Disney+ and Hulu — despite reporting better-than-expected third-quarter earnings Wednesday.
The Burbank, Calif.-based company posted earnings per share of $1.09 on revenue of $21.5 billion — aided by its theme parks and continued growth of Disney+. Wall Street expected adjusted EPS of 96 cents on revenue of $21 billion.
The Mouse House said that Disney+ — which boasts flicks like “Lightyear,” “Encanto” and “Turning Red” — signed up 14.4 million new subscribers in the quarter for a total of 152.1 million.
Analysts expected 10 million new sign-ups.
The company said revenue at theme parks, which include Disney World and Disneyland, reached $7.4 billion, marking an increase of 72%. Analysts predicted $6.65 billion in revenue from the division.
Shares of Disney surged more than 6% aftermarket on the results.
“We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership, and significant subscriber growth at our streaming services,” Disney CEO Bob Chapek said. “We continue to transform entertainment as we near our second century, with compelling new storytelling across our many platforms and unique immersive physical experiences that exceed guest expectations, all of which are reflected in our strong operating results this quarter.”
Chapek also touted the growth across Disney+, Hulu and ESPN+, which now have a total of 221 million subscribers.
However, during the quarter, streaming continued to lose money as Disney spent aggressively on content to keep pace with rivals like Netflix, Amazon and HBO Max.
Disney’s streaming division’s losses exceeded $1 billion compared with a year-ago loss of $300 million. Streaming revenue, however, climbed 19% to $5.1 billion.
Chapek said that a new Disney+ with ads, which will now be dubbed Disney+ Basic, will launch Dec. 8 at a cost $7.99 a month.
The price of Disney+’s ad-free service will be bumped 38% to $10.99 a month and be known as Disney+ Premium when the basic version launches.
Meanwhile, Hulu will also get a price hike. As of Oct. 10, Hulu with ads will go up a buck to $7.99 a month while the ad-free version will go from $12.99 to $14.99 a month.
The Disney Bundle, which includes Hulu with ads, Disney+ with no ads and ESPN+, will go up a dollar to $14.99 a month. The premium version of the bundle with no ads across any service, will remain at $19.99 a month.
As previously announced, the price of ESPN+ will increase by a whopping 43% on Aug. 23 to $9.99 a month.
“We will be providing greater consumer choice at a variety of price points to cater to the diverse needs of our viewers and appeal to an even broader audience,” said Kareem Daniel, the chairman of Disney Media & Entertainment Distribution, in a statement.
Disney’s growth in streaming numbers was in stark contrast to rival Netflix, which recently experienced a loss of 1 million subscribers in its most recent quarter. It still leads the pack with roughly 221 million sign-ups.
Disney said Hulu has 46.2 million subscribers, marking an 8% jump from a year earlier. Roughly 23 million people paid for ESPN+ access, up 53%. Disney+ banked 152.1 million subscribers, a 31% increase.
Chapek did lower the forecast for Disney+ subscriptions to 215 million to 245 million from his initial guidance of hitting 230 million to 260 million sign ups by the end of fiscal 2024. The company lowered its guidance after failing to renew Indian Premier League rights for its Disney+ Hotstar streaming service.
