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Disney wants to crack down on streaming free riders
The Walt Disney logo is seen on a screen at the New York Stock Exchange. photo
© Richard Drew/AP/dpa
Disney is fed up with the high losses in the streaming business. Now the entertainment giant is increasing subscription prices again – and also wants to take action against password free riders.
In the US, Disney+ without ads will cost $13.99 a month, twice as much as when it was launched in November 2019. Since there was a cheaper tariff with advertising, around 40 percent of new customers have opted for it, said Iger.
In November, the version with ads will also be launched in “select markets” in Europe for $5.99 per month, Disney announced on Wednesday. The price of current offers should then increase. Disney+ currently costs EUR 8.99 per month in Germany – and also includes programs from the Hulu service, for which you have to pay extra in the USA.
Netflix had also implemented its measures against password free riders in Germany since the beginning of the summer. Users accessing the Service outside of a Subscriber household are encouraged to purchase their own subscription. At the same time, subscribers can buy additional access for other users. According to the streaming market leader, the approach leads to higher subscriber numbers and sales, despite initial dissatisfaction. Netflix estimated that around 100 million users previously accessed the service with passwords from other households.
Disney cuts streaming losses in half
Disney and other streaming providers have so far accepted high losses in order to snatch market share from the pioneer Netflix. But the big Hollywood studios in particular are now trying to get the costs under control. Iger has already announced that fewer programs will be produced around “Star Wars” and “Marvel” comics – and what is filmed should cost less. With the price increases, Disney is also testing how attractive and indispensable its films and series are for users.
Disney roughly halved its streaming losses last quarter. However, the division still posted operating figures of 512 million dollars (466.5 million euros). Meanwhile, Warner Studios managed to push the streaming division’s operating loss to $3 million from $518 million in the same quarter last year. Paramount+ was down $424 million from $445 million a year earlier.
Disney also has the problem that the US cable TV business, which has been lucrative for a long time, is shrinking – and with it the buffer to afford further streaming losses. In the past quarter, revenues from traditional television fell by seven percent to $6.7 billion. Operating income fell 23 percent to $1.9 billion.
Many US households are giving up their cable TV subscriptions and switching to streaming. Iger has not ruled out that Disney could separate from the TV business with broadcasters like ABC. Even now he said that he sees the future of Disney in three areas in particular: films, amusement parks, streaming.
Good revenue from amusement parks and cruise lines
Streaming sales meanwhile increased by nine percent to $ 5.5 billion. Disney+ subscribers increased from 104.9 to 105.7 million in three months. In India, the number of customers fell by around a quarter to a good 40 million – Disney had lost the streaming rights to the cricket league. However, the group only takes $0.59 a month per customer there.
Meanwhile, theme parks and cruise lines continued to please Disney during the quarter, with revenue up 13 percent to $8.3 billion and operating income up 11 percent to $2.4 billion.
For the entire group, the development meant a sales increase of four percent to 22.3 billion dollars. The bottom line was a loss of $460 million from being in the black from $1.4 billion a year earlier.
A trigger for this was also a $2.4 billion write-down on video content. The reason is that Disney removed dozens of less popular films and series from Disney+ as a cost-cutting measure.
The studios compete not only with Netflix when it comes to streaming, but also with the tech giants Apple and Amazon, which can easily shoulder billions in costs for their services. In light of Disney’s difficulties, the Hollywood Reporter on Wednesday took up the idea that the entertainment giant could be bought by Apple. When asked about it after the quarterly figures were presented, Iger said he didn’t want to speculate about it.