Disney (DIS) announced Wednesday it would raise prices for its streaming services for the second time this year as the company works to narrow its direct-to-consumer losses and reach profitability for this business by the end of its fiscal 2024.
Effective October 12, the company will raise the monthly price of its ad-free plans Disney+ and Hulu plans by more than 20%.
The Disney+ ad-free plan will rise by 27% to $13.99 a month in the US, up from $10.99. That's double the $6.99 monthly cost Disney charged for the service when it first launched in 2019.
Hulu's ad-free plan will increase by $3 a month, or 20%, to $17.99 a month. The ad-supported tiers for both services will remain at $7.99 each.
The price hikes come amid Disney's continued efforts to slash $5.5 billion in costs this year.
The monthly prices of its two Hulu live TV packages will also increase by $7 each for both the ad-free plan and the ad-supported offering. ESPN+ will go up by $1 to $10.99 a month.
Additionally, Disney announced that starting September 6 subscribers in the US will have access to a new ad-free bundled subscription featuring the ad-free Disney+ and Hulu services for $19.99 a month.
Disney reported that streaming losses totaled $512 million in its fiscal third quarter, about half of the $1.1 billion loss reported in the prior-year period and less than the $777 million loss forecast by analysts. The company reported a streaming loss of $659 million in Q2 and a $1.1 billion loss in Q1.
Still, the company continues to shed subscribers with the media giant reporting 146.1 million total Disney+ subscribers at the end of the quarter, a 7.4% decline from the previous quarter. Analysts polled by Bloomberg had expected to see paying users total 154.8 million.
The majority of its subscriber losses came from its Indian brand Disney+ Hotstar, which saw users drop by 24% on a sequential basis. Disney said Hotstar is not material to the company due to its lower average revenue per user, or ARPU. Domestic users, however, which include those in the US and Canada, dropped by 1%.
Password-sharing crackdown coming to Disney+
In addition to the price increases, Disney CEO Bob Iger also said the company will address password sharing — echoing the strategy of competitor Netflix (NFLX), which recently rolled out its password-sharing crackdown to US subscribers in May.
"We are actively exploring ways to address account sharing and the best options for paying subscribers to share their accounts with friends and family," Iger said on a call with analysts on Wednesday. "Later this year, we will begin to update our subscriber agreements with additional terms on our sharing policies, and we will roll out tactics to drive monetization sometime in 2024."
Iger said the number of subscribers sharing accounts is "significant," though he wouldn't give a specific number.
Disney reported fiscal third quarter results that were mixed, with revenue coming in below estimates while adjusted earnings per share topped Wall Street expectations.
These results came after the company revealed its flagship sports network ESPN struck a $2 billion deal with Penn Entertainment (PENN) to launch ESPN Bet, a branded sportsbook.
The Disney+ subscriber miss initially caused shares to slide in after-hours trading, but shares rose as much as 3% in extended trade after the company said its full-year 2023 capital expenditures would total $5 billion, below its $6 billion forecast.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
