Disney plans to raise the monthly price of Disney+ to $7.99 a month from $6.99 next March as it ramps up its content offerings substantially.
In continental Europe, the service will also go up €2 a month to €8.
Disney+ now has 86.8 million global subscribers and the company projects it will reach between 230 million and 260 million around the world by the end of fiscal 2024. (The trajectory is much steeper than the initial target of 60 million to 90 million by 2024, which was achieved in less than a year.)
The price hike was revealed during the company’s investor day, when it outlined a big film and TV push across all of its divisions, with 100 new titles from Marvel, Pixar, Lucasfilm, National Geographic and Disney’s own brand. The March rate increase will coincide with the arrival of Marvel series Loki as well as animated feature Raya And the Last Dragon. The latter will be offered to subscribers as a Premier Access title, the same release pattern used for Mulan last summer, though pricing has not been confirmed. (Mulan cost subscribers an extra $30 before then moving to the regular flat-price service, while features like Hamilton and the upcoming Soul never had an extra charge.)
“We’ve clearly positioned ourselves in the leader of the direct-to-consumer space,” executive chairman Bob Iger proclaimed. The exec was CEO until February and spearheaded the company’s drive toward streaming. The programming pipeline has become more “robust” and “ambitious” than was expected at the start of the streaming push, Iger added. In the coming years, the increase in content will mean two new film or series titles arriving each week. Those films and series don’t come cheap. Disney expects to be spending $8 billion to $9 billion on Disney+ fare per year by fiscal 2024, according to CFO Christine McCarthy.
At the company’s last direct-to-consumer investor day, in April 2019, the reveal of the price of Disney+ drew gasps in the room of analysts and media. It put Disney at the low end of the competitive set. WarnerMedia’s HBO Max is $15 a month and Netflix is $14 for its most popular subscription tier.
Average revenue per user, a key metric used in streaming, has been a little slimmer for Disney+ than for its rivals despite the rapid adoption of the service. Given the big influx in content spending, the company is betting that consumers will accept the higher price point, especially with a larger selection of feature films heading to streaming due to Covid-19.
Discounting — whether through a partnership with Verizon or advance signups for Disney customers or three-year subscriptions — has been a significant element of its growth.