The cost of a Disney + ad-free subscription will go up in the US

A Disney logo forms part of a menu for the Disney Plus movie and entertainment streaming service on a computer screen in Walpole, Mass., Wednesday, Nov. 13, 2019. (AP Photo/Steven Senne)

Sydney, 2022-08-10 20:26:21. The cost of a Disney + ad-free subscription will go up in the US

The Walt Disney Company said Wednesday it is raising prices for streaming subscribers in the United States who want to watch Disney+ without ads, as more viewers turn to what CEO Bob Chapek described as “the best value in streaming.”

The price increases are tied to a new tiered service that Disney will launch in December to US subscribers. Today’s basic Disney+ service costs $7.99 per month. Starting in December, this basic service will show ads, so a subscriber who doesn’t want any ads will have to upgrade to a premium service starting at $10.99 per month, a 37.5% increase over current prices. The annual plan will cost $109.99.

“We expect the ad layer to be popular and we expect some people to want to stay ad-free,” CFO Christine McCarthy said on a conference call with analysts.

Netflix’s most popular US streaming plan is now $15.50 a month, and its best-in-class plan is $20 a month. It comes after several price hikes to help pay for its original programming, which has become more important since Disney pulled its classic shows and movies from Netflix after licensing agreements between companies expired.

Disney said it added 14.4 million subscribers to its streaming service Disney+ in the April-June fiscal quarter. In total, subscribers to all of Disney’s streaming services, which include Hulu and ESPN+, have reached about 221 million, putting the entertainment giant slightly ahead of Netflix in the streaming wars.

Netflix ended June with 220.7 million subscribers after losing nearly a million subscribers in the last quarter.

Disney said paid subscriptions to Disney+ grew 31%, mostly internationally, compared to the same time last year. But revenue growth was not strong due to operating losses from “high programming, production, technology and marketing costs”.

Disney’s surge in sales, combined with a recovery in the theme park business after the pandemic-era shutdown, led the Burbank, California, entertainment giant to beat Wall Street expectations for quarterly earnings on Wednesday.

Disney reported $21.5 billion in revenue in the three months to July 2, up 26% from the same period last year.

Earnings per share reached $1.09 when excluding some items. Analysts polled by FactSet expected adjusted earnings of 97 cents per share on revenue of $20.99 billion for the quarter, according to FactSet Research.

Disney said sales at theme parks, experiences and products grew to $7.39 billion, up 70% from $4.34 billion a year earlier. The numbers represent a steady return from COVID-19 restrictions that temporarily closed all Disney parks in 2020, reduced capacity through most of 2021 and continued to affect some locations such as Shanghai Disneyland, which was open for only three days in the April-June quarter.

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