Disney+, the rising streaming service, recently made good on its promise from Investor Day 2020 to raise subscription prices by $1. This is the first time the company is doing so since its launch 16 months ago. Consumers will now pay $7.99 a month, or $79.99 for a whole year.
While the price hike seems insignificant, and is still lower than the streaming service’s competition, Disney+ is gearing up for an even more content-filled future. Its growing library of on-demand shows and movies is one of the biggest motives for the $1 increase.
“We also believe we have the opportunity to increase Disney+ pricing given the additional value we will be adding to the service,” said Christine McCarthy, CFO at The Walt Disney Company, on Investor Day.
Disney+ recently surpassed 100 million subscribers, putting it at the halfway mark in comparison to Netflix. By investing in content production and increasing its prices, Disney+ can attract more subscribers to its streaming services and further position itself to becoming the leader of the streaming industry.
The Impact of Raising Subscription Prices
Raising prices for a subscription service isn’t new. As budgets for content spending grow, so do the recurring costs consumers pay. Companies shouldn’t underprice products because a price point that worked in the early days may not work over time.
Churn rates typically increase when businesses don’t communicate a price change with their consumers and the cost no longer represents the value in what they’re paying for. That is why a pricing strategy needs to revolve around providing the exact kind of value that a consumer is willing to pay for.
Disney+’s new strategy does exactly that, with dozens of new movies and shows available for an extra dollar per month. While there’s no clear data on the impact to Disney+’s subscriber count, the company is confident in its pricing strategy and the value it brings consumers.
The results of raising a price point could go either way, though. Netflix lost close to 130,000 subscribers in 2019 after raising its premium subscription plan by $2. The company’s reasoning followed Disney+’s: producing more content should come at a price.
Disney+’s Future Content Plans
Disney+ does not anticipate subscriber numbers to go down because of the increased prices. Instead, the company expects to reach 230-260 million total global subscribers by the end of 2024. The company understands the importance of putting out good, entertaining and relevant content in a timely manner to reach its future goals, and 2021 is serving as a launching pad to ensure everyone gets what they want.
Here is a list of some new releases by Disney+:
- WandaVision — Marvel Studios’ first series on Disney+ was released on Jan. 15 of this year, receiving more views than Netflix’s record-breaking “Bridgerton” series
- The Falcon and The Winter Soldier — Released March 2021
- Loki — June 2021
- Cruella — Release in theatres and on Disney+ in May 2021.
- Black Widow — Release in theaters and on Disney+ in July 2021
These are only a few of the countless, original projects that Disney+ is working on. Over the next few years, Disney+ subscribers can expect 10 Marvel series, 10 Star Wars series, and a mix of 30 Disney live-action, Animation, and Pixar series and films in total.
The company’s efforts in growing and creating original direct-to-consumer content is a reflection of its loyalty and commitment to user satisfaction. Disney+’s content budget is expected to be between $8 and $9 billion in 2024 to keep up with the increased level of output, putting the company on a clear path toward rising as the leader of the streaming industry.
Key Takeaways:
- Disney+ raised its prices by $1/month.
- The company plans to release an avalanche of content in the next few years.
- Disney+ expects to have 230-260 million total global subscribers by the end of 2024.
- Avoiding customer churn when raising prices depends on the value provided by the business.