Disney + has just raised prices. This is why

‘Obi-Wan Kenobi’, ‘Lando’, ‘Ahsoka’, ‘Loki’, ‘Ms. Marvel ‘,’ Moon Knight ‘,’ Hawkeye ‘,’ She-Hulk ‘,’ Sister Act 3 ‘,’ Zootopia + ‘, “Pinocchio”, “Hocus Pocus 2”, “Peter Pan & Wendy” and “Chip N’ Dale: Rescue Rangers. ”
Disney + increased the cost of its monthly subscription by $ 1 Friday. The increase – which the company announced in December – takes the streaming service in the United States from $ 6.99 per month to $ 7.99. Disney’s bundle, which includes ESPN + and Hulu, is also going up by a dollar from $ 12.99 to $ 13.99.

A dollar may not seem like much, but it’s important for consumers who run out of wallets for every new streaming service that pops up.

But the price hike may be the first of many to come as the service and extensive content library continues to expand.

“The pricing strategy did what it had to do”

When Disney DIS first announced the low price of Disney + in April 2019, there were audible sighs during the investor day presentation.
Analysts and media observers were genuinely shocked that Disney’s new service – which houses Star Wars, Marvel, Pixar and every season of “The Simpsons” – was about half the standard price of its biggest rival. Netflix NFLX
Thanks to that award, a cute baby who looked exactly like Yoda, a rapping founder, a witch who loves nostalgic TV and a wealth of other brand-name content, Disney + became a Goliath in the streaming world.
The service surpassed the 100 million subscriber milestone in just 16 months, surpassing all expectations. Disney’s streaming unit was also a lifeline for the company when the pandemic ravaged its businesses.

According to Andrew Hare, a senior vice president of research at media company Magid, that success gave Disney + “pricing power,” where it was able to raise prices just over a year after launch.

“Disney + has been hugely successful since its launch, I think even the most optimistic believers in the product are moving forward,” said Hare. “The pricing strategy did what it was supposed to do. It brought in a huge amount of people and almost immediately Disney + competed with the best streaming services.”

But now things have changed. Disney’s goal is not to prove that a traditional media company can adapt to the future of streaming. Like many of its other space rivals, Disney’s new goal is to own a bigger piece of the streaming pie to challenge Netflix’s spot at the top.

Price hikes, even small ones, can help with that.

More more more

To stand out, streaming companies need content that is both compelling and worth signing up for.

Disney has that with original hits like “The Mandalorian” and “The Falcon and the Winter Soldier”, as well as the contents of the library.

It even routes content to the service that was never intended for streaming. This is the case with Marvel’s next movie, “Black Widow.” That film, which has been postponed due to the corona virus, will go to theaters and Disney + in July at an additional cost. “Cruella”, a live action movie about Cruella de Vil, and Pixar’s “Luca” will also be available on the service.

But streaming success is all about more, more, more.

Get ready to see more movies like 'Cruella' on Disney +
How much more? Well, Disney plans to spend between $ 14 billion and $ 16 billion on its streaming businesses in the coming years. That money has to come from somewhere. If Disney is to deliver on its fiscal 2024 profitability forecasts, raising prices is probably the best way to produce quality content that subscribers want while being profitable.

So the $ 1 surge on Friday is probably just the beginning. However, that doesn’t mean you have to break the bank for a Disney + subscription.

Hare believes there could be even more price increases in the future of Disney +, but “it could also mean that consumers will downsize other services to ensure they keep Disney + at the top of their paid services.”

“Disney + will probably still be overpriced when you consider the fandom and content,” he said. “It is now a proven and formidable streaming service and will be able to exercise pricing power in the future even as competition in streaming gets fiercer.”