Price of ESPN+ going up starting August 13

As of August 13, Disney will increase the price of its ESPN+ subscription by $1. Customers will pay $6.99 a month, or $69.99 a year, up from the current $5.99 or $59.99 annually, while the price for the bundle of ESPN+ with Disney+ and Hulu will remain the same at $13.99 a month.

Video Transcript

MYLES UDLAND: Talk a little bit about those numbers that "Black Widow" had brought in over the weekend, particularly the streaming numbers that we saw on the Disney Plus platform, some $60 million in box office coming from Disney Plus subscribers renting the movie for 30 bucks a pop.

And now we see news that in that Disney bundle or a part of the Disney Plus suite of products, let's say, ESPN Plus is raising its prices as we head into football season. ESPN Plus will now be 7 bucks a month starting August 13, or $70 a year. Initially, that had been 6 bucks a month, or $60 a year. Now, like Disney Plus, if Brian Sozzi wants to stream UFC, which I know he wants to, he then has to pay on top of that in the pay per view-- as a pay per view function.

But Sozzi, I mean, I think it shows kind of the future of all of these streaming bundles, which we've talked about, which is particularly one like Disney. When you have a toehold and you have the number of subscribers they have, they are going to be very aggressive, I don't think in a way that that Netflix ever was, in jacking up their prices and essentially seeing how much the market will take. Because right now, they have a clear lead over your Peacocks, Paramount Pluses, even HBO Max.

BRIAN SOZZI: Yeah, and also keep in mind, when all the services launched, they were primarily designed to undercut any competitors in the marketplace. So when they first launched, some of the prices, the opening price points were very, very low, especially Disney Plus. But to your point, Myles, first, here's another price increase or a first in price increase for ESPN Plus. Disney has already raised prices for Disney Plus.

I would suspect more are on the way, in large part because of the deals they've had to strike with TV companies, with other content producers with, let's say, sports agencies, sports places. So it makes sense. Now the one price increase I would be very keen to keep an eye on is Netflix. When does Netflix next hike its-- raise its price? Normally it does it about every year and a half. And can it keep the customers that it did, that it gained during the pandemic? I think it's very important to watch.

But there's also another story playing out here, Myles and Julie, with Disney. I'm just looking at the stock right now. Only up about 3 and 1/2% in the past six months. That has underperformed the Dow. The Dow is up about 12 and 1/2%. And it shows I think the market concerned about the recovery story at the theme parks. There's been so much focus the past year and a half of the pandemic of what Disney is doing in the streaming space. It's been a good story for them.

But now, the focus appears to be turning back on the theme parks, as it should be. I mean, that is Disney's bread and butter business here. And I just don't think you're seeing that strong snapback in growth there that a lot of investors would have hoped to see by now, especially during the summer season.

JULIE HYMAN: You guys, what I do want to bring up, though, when it comes to ESPN or ESPN Plus and then being able to raise the price for that, is, you go back a couple of years. ESPN was the weak spot at Disney. And so I wonder if they are able to offer it for these higher prices. You guys are more sports spectators than I am. Does that mean that we are seeing more of a recovery at ESPN? I mean, it was ad sales, to some extent, that was the problem before. Does this show that ESPN has had a resurgence?

MYLES UDLAND: I wouldn't go so far as to say it shows ESPN has had a resurgence. I think it shows that Disney is not going to any longer sit around and figure out what the future of ESPN is, right? I mean, the strength of ESPN was built on the back of the cable bundle, where you had, I mean, I would venture to say, 50 million American households probably paying for ESPN without wanting to pay for ESPN, right?

It got to peak at 100 million households that were subscribers to ESPN, which I think that peaked in 2015. About half-- probably at least half of those were not interested in the service. So then Disney's question that it has tried to answer-- needs to answer-- is how can we more effectively monetize the remaining 50 million subscribers if we assume that the adoption or their uptake of cable packages is, like the rest of the market, going to decline over time.

And so, you end up with an ESPN bundle that continues to add, I mean, major sporting events. There will be NHL games. And granted, the NHL is 1/4 of the four major American-- North American sports. But the NHL will have games that are exclusively on ESPN Plus, which I think for the sports enthusiasts, is going to mean that there's really no way to not have this service. Now they had about 14 million, just under 14 million subscribers to ESPN Plus at last check.

But, you know, if we're doing the quick math here, they're still trying to make up maybe a 20, maybe a 30 million subscriber gap on ESPN Plus subs versus how many cable households they have if we assume some future has zero cable households. It probably won't be that low, but it'll get in the ballpark of it. And so I think when you continue to invest in the rights for UFC, for-- I mean, the PGA TOUR rights, NHL rights-- just reupped with the SCC-- so on and so forth.

When you buy all these rights, you have to find a way to monetize it. And I think ESPN and Disney is not going to pause in trying to jam more people into the ESPN Plus service. And look, I'm going to pay for it. Not exactly sure if I need it. I'm not totally sure why. But it's going to be better to be safe than sorry. And I think that's kind of how they're betting on that market, right?

JULIE HYMAN: Seems like it. We'll see if people will pay for it.

MYLES UDLAND: All right, yeah.