The Walt Disney Company is set to institute planned price hikes across its portfolio of streaming services, impacting millions of users around the world who utilize the platforms for content. Monthly subscriptions for ESPN+ will increase from $9.99 to $10.99, while the annual plan for the platform will move from $99.99 to $109.99.
In an email recently sent to subscribers, the company claimed that the changes were being made so it could continue to bring fans “more exclusive live sports, ESPN+ originals and premium editorial.” The adjustments will go into effect on Oct. 12 ahead of the release of the company’s fourth quarter 2023 financial results, which will take place on Wednesday, Nov. 8, 2023 after the close of regular trading.
Last quarter, direct-to-consumer (DTC) revenue for The Walt Disney Company rose by 9% to $5.5 billion, while linear network revenue took a 7% hit, diminishing to $6.7 billion. Operating losses for DTC declined by 52% to $512 million, which was due to a lower overall loss at Disney+ and ESPN+. According to the company’s financial report, ESPN+ subscriber count stayed relatively flat last quarter at 25.2 million people; however, average monthly revenue per paid subscriber subtracted by 3% to $5.45.
ESPN is preparing for the launch of a DTC product that will allow customers to purchase a subscription to the network outright without the need of a cable subscription. The rate of cord cutting in the United States has hastened expeditiously, with major pay television bundle providers losing 8 million customers.
Changes in consumption habits and technology predicated on innovation and forward-thinking has forced content creators to rethink the ways they disseminate programming. The Pat McAfee Show, for example, is distributed both on traditional linear television and on ESPN’s digital channels, leading to a sublime viewership report last month.
Furthermore, ESPN will soon implement “ESPN BET” into its offerings, working with PENN Entertainment to create a platform for users to responsibility wager on their favorite teams where it is legal throughout the United States. The 10-year deal worth a reported $1.5 billion will grant PENN exclusive rights to use the platform trademark across its own channels, and the network will promote the service through its media outlets.
Adjusted EBITDA potential for the deal with a retail cross-sell falls between $500 million and $1 billion, with the ceiling augmenting to $1.5 billion should the “Worldwide Leader” attain specific performance warrants.
The price hike from The Walt Disney Company will reportedly be followed by plans from Netflix to do the same following the end of the SAG-AFTRA strike. The Writers Guild of America (WGA) and Alliance of Motion Picture and Television Producers (AMPTP) recently reached a deal that ended what became the second-longest strike in Hollywood history, which provided augmented minimum wage and compensation, protections against artificial intelligence technologies and residual pay among other factors.
