DISNEY is hiking the price of its Disney+ streaming service in the U.S as it introduced a new subscription tier that runs ads during shows.
The price increases are tied to a new tiered service Disney will launch in December for U.S. subscribers.
The basic Disney+ service today costs $7.99 per month.
Starting in December, that basic service will run ads, so a subscriber who wants no ads will have to upgrade to a premium service that starts at $10.99 per month, a 37 per cent rise over current prices.
An annual plan will cost $109.99.
It means that viewers wanting to stick to their current price plan will have to watch adverts during their favourite shows and movies.
And it’s a change that’s likely to make its way to the U.K. once the ad-supported tier launches here, possibly as early as next year.
“We expect the ad tier to be popular and we expect some people to want to stay with ad-free,” Chief Financial Officer Christine McCarthy said on a conference call with analysts.
The price jump comes at a terrible time for consumers already squeezed by the rising cost of living.
Netflix’s most popular streaming plan in the U.S. is now $15.50 per month, and its top-of-the-line plan is $20 per month.
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That follows several rate hikes to help pay for its original programming, which has become even more important since Disney pulled its programming and classic movies from Netflix after licensing agreements between the companies expired.
Disney said it added 14.4million subscribers to Disney+ in the April-June fiscal quarter.
In total, subscribers to all Disney streaming services, which include Hulu and ESPN+, amounted to about 221million, putting the entertainment giant slightly ahead of Netflix in the streaming wars.
Netflix ended June with 220.7million subscribers after losing nearly 1 million subscribers in the past quarter.
Disney said paid subscriptions for Disney+ grew by 31 per cent, much of that internationally, over the same time last year.
But revenue growth was not as strong due to operating losses from higher programming and production, technology and marketing costs.
Disney’s growing streaming sales, combined with a recovering theme park business after pandemic-era shutdowns, led the Burbank, California-based entertainment giant to beat Wall Street expectations with quarterly earnings Wednesday.
Disney reported revenue of $21.5billion in the three months through July 2, up 26 per cent from the same time last year.
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