Disney+ will raise prices in the U.S. on Friday to $8 a month from $7.
The Disney+ bundle, which includes Disney+, Hulu, and ESPN+, is also going up to $14 a month from $13, or $19 for a version without ads. On an annual basis, Disney+ will now be $80, up from $70.
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In continental Europe, the service just went up to €9 in the UK to £8, increases of two Euro and two pounds, respectively. In Canada, the cost jumped to $12 Canadian from $9.
This month’s price increases were announced last December during the company’s investor day and the March 26 date was reported several weeks ago. It is the first time the company has raised the price of Disney+ since launching it in November 2019. The streaming service recently passed 100 million global subscribers across dozens of global territories, the company reported earlier this month.
When it was initially revealed two years ago, the $7 price of Disney+ drew audible gasps from analysts and press gathered in Burbank at a previous investor event. Given the value of Marvel, Star Wars, Pixar and other properties it offers, the cost of Disney+ is certainly highly competitive. Yet as the streaming competition has intensified, it is now closer to the middle of the industry pack than when it first came to market. Especially if you are don’t object to watching a few ads.
NBCUniversal’s basic tier of Peacock is free and ad-supported, while its premium level is $5 a month with ads, $10 without. Apple TV+ is $5 a month and has no ads. The ad tiers of Paramount+ and Discovery+ are also $5 a month and the entry-level tier of Hulu is $6. At the top end of the range is HBO Max at $15, though WarnerMedia will launch a cheaper, ad-supported version of it later this spring, at a price point to be announced.
Netflix’s willingness to continue raising prices — and generally keep subscribers in the fold nevertheless — will encourage Disney and other players to consider a similar path. The longtime streaming leader, with nearly 204 million subscribers, just went to $14 a month in the U.S., from $13, and it has never had advertising. An Amazon Prime membership, meanwhile, is $13 a month (or $119 a year), with benefits that include video streaming. A few Prime offerings, notably live sports, have ads.
The growth of Disney+, at a higher price point, should pay dividends for the company. The company upped its internal targets last December to 230 million to 260 million subscribers by the end of 2024, a steeper trajectory than the 2019 forecast for 60 million to 90 million.
In terms of one closely watched metric, Disney is trailing major rivals like HBO Max and Netflix: average revenue per user, or ARPU. In its fiscal first quarter results, reported in February, the company said ARPU was just $4.03, down 28% from the same period in 2019. The culprit was lower prices offered in India and other Southeast Asian territories via Hotstar, which offers Disney+ an add-on to its existing service. Excluding Hotstar, which represents about 30% of all Disney+ subscriptions, ARPU was $5.30 in the quarter.
The other key variable is programming, and Disney is committing billions of dollars to boost the number of film and TV offerings coming to Disney+. During the company’s epic-length investor day, it said it will ramp up to deliver 100 new film and series titles each year, or an average of two per week. That abundance, compared with the lean environment in which The Mandalorian broke out, should limit churn — aka the number of subscribers who decide to cancel.
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