Another significant American company has increased prices once more, but this time, don’t attribute it to inflation.
Disney is raising the cost of its streaming services and hinted that a price increase for its theme parks may follow. The business announced on Wednesday that starting on December 8, the cost of Disney+ without ads will increase from $3 per month to $10.99. Hulu with advertisements will go up by $1 per month to $7.99, while Hulu without advertisements will increase by $2 per month to $14.99.
Then, on Thursday, Disney CEO Bob Chapek told CNBC’s Julia Boorstin that as long as people keep flocking to theme parks in large numbers, there will probably be a price increase.
“We monitor demand. We don’t currently have any plans for what we’ll do, but we work with a surgical knife here,” Chapek said. “The consumer has complete control. If consumer demand continues, we will proceed as planned. We can also take appropriate action if we observe a softening, which we don’t anticipate happening.
Disney Attributes The Increases to The Success
Disney is blaming the increases on the consistent success of its products rather than the rising cost of materials, labor, and gas. Disney+ exceeded expectations last quarter, adding 15 million new subscribers, the company announced on Wednesday. Additionally, it stated that it anticipates core Disney+ (excluding Disney+ Hotstar in India) to grow by more than the 6 million subscribers it added during the third quarter of its fiscal year.
Disney has a history of raising prices in response to high demand. The cost of admission to theme parks has increased for many years. In its most recent quarter, the company’s parks, experiences, and products division reported an increase in revenue of 70%, bringing it to almost $7.4 billion. In domestic parks, per-person spending increased by 10% and increased by more than 40% from fiscal 2019.
The decision to strategically cap park attendance resulted from Disney’s desire to prevent crowding during the Covid pandemic. The change is being made to enhance the client experience. The business has also included Genie+ and Lightning Lane products, which enhance guest experiences and enable park visitors to skip lines for popular attractions.
Aside from the theme parks, Disney annually demands aggressive price increases from cable TV providers for ESPN because it understands there is a high demand for its stable of live sports rights.
In November 2019, Disney+ made its initial debut for $6.99 per month. The cost of the ad-free product will have increased by 57% in about three years. Over 152 million people are using the service at this time.
Since taking over as CEO of Disney after Bob Iger left, Chapek has encountered his fair share of difficulties. One thing hasn’t changed, though: it seems like people still like what Disney has to offer.