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Disney raises streaming prices after services post a big operating loss

Starting Dec. 8 in the U.S., Disney+ with commercials will be $7.99 per month — currently the price of Disney+ without ads.
Image: Attendees visit the Disney+ streaming service booth at the D23 Expo on August 23, 2019 in Anaheim, Calif.
Attendees visit the Disney+ streaming service booth at the D23 Expo on August 23, 2019 in Anaheim, Calif.Robyn Beck / AFP via Getty Images
/ Source: CNBC.com

Disney unveiled a new pricing structure that incorporates an advertising-supported Disney+ as part of an effort to make its streaming business profitable.

Starting Dec. 8 in the U.S., Disney+ with commercials will be $7.99 per month — currently the price of Disney+ without ads. The price of ad-free Disney+ will rise 38% to $10.99 — a $3 per month increase.

The price of Hulu without ads will rise by $2 per month, from $12.99 to $14.99, effective Oct. 10. Hulu with ads will go up by $1 per month, rising from $6.99 to $7.99.

Disney announced last month that ESPN+ with ads would go up 43% to $9.99 per month.

The price increases reflect the growing operating loss for Disney’s streaming services. Disney+, Hulu and ESPN+ combined to lose $1.1 billion in the fiscal third quarter, $300 million more than the average analyst estimate, reflecting the higher cost of content on the services. The increased operating loss occurred even while Disney added about 15 million new Disney+ subscribers in the quarter, about 5 million more than analysts estimated.

Disney has previously stated it plans to lose money on Disney+ until 2024. Chief Financial Officer Christine McCarthy reiterated on Wednesday’s earnings conference call that Disney+’s losses will peak during the company’s fiscal 2022.

Average revenue per user for Disney+ decreased by 5% in the quarter in the U.S. and Canada due to more customers taking cheaper multiproduct offerings.

Overall, the company’s quarterly results, also announced Wednesday, beat analysts’ expectations on the top and bottom lines. Disney+ subscriptions rose to 152.1 million during the most recent period, higher than Wall Street’s projections of 147 million.

Counting Disney+, ESPN+ and Hulu (which is partially owned by Comcast, the parent company of NBC News), Disney has 221 million streaming subscribers.

Bundled pricing

Disney also announced new bundle prices incorporating its Disney+ product with commercials.

For existing customers only, a bundle of Disney+ without ads and Hulu and ESPN+ with ads will increase by $1, from $13.99 to $14.99.

The price of a bundle of Disney+, Hulu and ESPN+, all with ads, will be $12.99, or $1 lower than the current Disney bundle price.

Consumers will be able to purchase a Disney+ and Hulu bundle for $9.99 per month with commercials. That’s a discount to paying for Disney+ and Hulu with ads separately.

The price of a no-ad Disney+ and no-ad Hulu, with ESPN+, remains $19.99 per month.

Disney will also have new pricing for its Hulu with live TV bundles. Subscribers that want Hulu with live TV and Disney+, Hulu and ESPN+ with commercials will pay $69.99 per month.

For existing customers, Disney will offer Disney+ without commercials in that bundle for $74.99. The premium bundle of Hulu with live TV along with Disney+ and Hulu without ads will be $82.99 per month.