If Disney Is Losing Subscribers, Then Why Is It Hiking Prices?
Written by
Chris Adam
Edited by
Rebekah Evans
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The situation may not be so magical for Disney when it comes to streaming subscribers. For the first quarter of the year, the company lost money — a reported a 1% loss in Disney+ subscribers, according to CNBC. For perspective, that means 124.6 million subscriptions compared to 125.3 million. Company officials said more subscriber losses may be coming.
Despite these changes, Disney+ prices are steady increasing — how is this affecting consumers?
Price Hikes at Disney
The loss in subscribers comes after Disney increased prices for services last year. Many subscribers saw increases around a dollar or two per month.
When diving deeper into the numbers, it’s clear that Disney may continue raising prices to stay competitive with other streaming platforms. In fact, if you do the math, the increases are more than enough to make up for the losses in subscribers this time around.
According to Justin Farmer, CEO of Exit Wealth Advisors, customers seem more likely to cut Disney services than competitors such as Netflix. As for the price increases, Farmer said to look at the pandemic for perspective.
“During the COVID pandemic, the name of the game was simply to add as many subscribers as possible,” Farmer said. “They were losing money doing it. It’s very expensive to create quality content. Now, these companies must get profitable with their content strategies and players like Netflix and Amazon with the deepest pockets will win.”
Crackdown at Disney
Also like its competitors, Disney has been taking actions to crack down on piracy and users sharing passwords with friends and family members.
Per The Motley Fool, one advantage Disney may have over its streaming rivals is the bundling options for customers. Those options include Hulu and ESPN+.
That means Disney officials may be looking even harder in coming months for ways to show how bundling opportunities and other options add even more value for subscribers.
Stocks at Disney
When it comes to the impact of price hikes and subscriber losses on stocks, the drops seem to be only temporary. Part of the reason may be that the company can offset those issues with successes in other areas.
“Stock performance really tells the story,” Farmer said, who leads a team responsible for managing some of America’s wealthiest families. “In the past 12 months, Netflix and Amazon stocks have been up significantly, with Disney stock trading flat.
“As an investor, I would only put my money into Netflix and Amazon. Netflix is king of the hill and growing. I like Prime because they have the back stop and money of Amazon.”
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