Disney wants to make money with its streaming service soon. In order to achieve this, the US entertainment group is also taking action against password free riders. He also announced price increases.
Using a streaming account together, even though you don’t live in the same household: After Netflix, Disney also wants to end this practice. CEO Bob Iger announced that the free sharing of passwords for the in-house streaming service Disney + will no longer be possible beyond one household in the coming year. Iger also announced that the ad-free version of the streaming service will be more expensive. In the US, Disney+ without ads will now cost $13.99 a month, double what it was when it launched in November 2019.
In addition to the ad-free version, Disney+ already offers a subscription with advertising in the US, which is significantly cheaper. According to Iger, around 40 percent of new customers opt for it. In November, the version with ads will also be introduced in “selected markets” in Europe for $5.99 per month, as Disney has now announced. The price of the ad-free offer should then increase. Disney+ currently costs EUR 8.99 per month in Germany.
Group reduces its losses
The Disney boss reported to investors in the entertainment group that the austerity program was taking effect. The US company was able to roughly halve its loss in the video streaming business in the past quarter. CEO Bob Iger sees himself on track to save even more than the originally targeted $ 5.5 billion.
However, Disney+ continued to post a deficit of $512 million after a minus of around $1.1 billion in the previous year, as the company announced yesterday after the market closed. Disney+ subscribers grew by 800,000, but that fell short of analysts’ expectations. The group does not expect profits from the streaming division until 2024.
Classic TV business as an obsolete model?
Disney has the problem that the US cable TV business, which has long been lucrative, 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 already announced that Disney may divest itself of the TV business with broadcasters like ABC. Iger told CNBC that the business model behind traditional TV networks, including ABC, is “definitely broken,” noting that they “may not be core to Disney.”
In order to make the sports broadcaster ESPN more profitable, Disney had previously announced a cooperation with Penn Entertainment. Together with its partner, the entertainment group wants to enter the sports betting business in the USA – a highly competitive market that promises companies big profits. According to the American Gaming Association (AGA), Americans spent more than $31 billion on legal sports betting in the first quarter of 2023.
Profitable amusement parks
Iger sees the future of Disney in three areas in particular: films, amusement parks, streaming. The group can currently benefit from the recovery after the corona pandemic, especially in the case of amusement parks and cruises. In this division, sales in the reporting period rose by 13 percent to 8.3 billion dollars and operating profit by 11 percent to 2.4 billion.
The bottom line is that the group wrote a total loss of 460 million dollars after a plus of around 1.4 billion dollars a year earlier. Sales improved four percent to $22.33 billion. Analysts had forecast $22.5 billion. Disney shares rose about four percent in after-hours trading.