Price Hike Hits Streaming Network Hard

As you may have heard, the House of Mouse has announced a significant drop in subscribers for their streaming service in the last three months. That’s right, Disney Plus has lost a total of 1.3 million subscribers.

This news was first made public on January 7th during Disney’s Q1 2024 earnings call by their Chief Financial Officer, Hugh Johnston. Despite the service gaining approximately 1.2 million Hulu subscribers in the same period, Disney Plus has seen a decrease in its core subscribers.

So why did this happen? According to Johnston, there are a few factors at play. The recent price hike in October 2023, where the ad-free tier increased by 27% from $10.99 to $13.99, has caused a temporary uptick in churn.

This means that some users may have decided to unsubscribe due to the increased price, which was expected by the company.

Additionally, the end of the global summer promotion, where new and returning users could sign up for a three-month subscription for just $1.99, may have also contributed to the loss of subscribers. However, it’s not all bad news for Disney Plus. The company’s direct-to-consumer streaming operations have seen a boost in operating income by $850 million compared to the previous year.

Johnston also mentioned that the service’s average revenue per user has increased by $0.14 in the last quarter, and by an impressive $1.07 compared to the prior year. These numbers are a result of the recent price increase, which has shown a positive impact on the company’s revenue.

Looking ahead, Disney is predicting a net addition of 5.5 million to 6 million subscribers in the second quarter. They are also hopeful to gain 7.5 million new domestic subscribers to offset the predicted decrease in international users.

Interestingly, in their Q3 2023 report, the company revealed a massive loss of 11.7 million subscribers due to a break in their licensing deal with HotStar, an India-based streaming platform.

Despite the dip in subscribers, Disney remains optimistic about the future of Disney Plus. The streaming service continues to grow in popularity and has been a major source of revenue for the company. In fact, in the last quarter of 2023, Disney Plus gained 7 million new subscribers but also burned $387 million in operating costs.

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