Disney hikes prices of its streaming services as profit booms
Disney beat expectations in its third quarter revenue and earnings, swinging back from heavy losses as it hiked its streaming services prices.
Pre-tax profit soared to $3.1bn (£2.4bn) in the third quarter, up from losses of $134m (£105m) the previous year.
The company’s streaming business turned profitable for the first time, buoyed by the success of the Inside Out 2 movie at the box office.
Operating income for Disney’s entertainment segment surged nearly threefold to $1.2bn (£943.4bn), fuelled by improvements in direct-to-consumer and content sales.
The turnaround also ended a streak of four consecutive quarters of missed revenue expectations. Disney now anticipates full-year adjusted earnings per share growth of 30 per cent.
In its experiences division, including theme parks, revenue rose three per cent overall, with international up five per cent. However, operating income from domestic parks fell six per cent due to inflation and tech spending.
Adam Vettese, market analyst at investment platform eToro, said the moderation of consumer demand, which could impact the next few quarters, might “sound alarm bells with investors who are already jumpy about slowing demand amongst US consumers.”
Shares in the company slumped as low as three per cent during early trading in New York on Wednesday.
It follows the announcement of a 25 per cent price hike for Disney’s streaming services starting mid-October.
Most plans for Disney+, Hulu and ESPN+ will cost $1 to $2 more per month, while the most expensive plans for Hulu, which include live TV, will cost $6 more per month.
Disney+ will now cost $9.99 for basic and $15.99 for premium, Hulu with ads will be $9.99, ad-free Hulu $18.99, and ESPN+ $11.99.
This is the fourth price increase since Disney launched its streaming platform. It is not known if this price hike will affect the UK, although previous ones have done.