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Monday, March 14, 2022

Disney CEO: Big Price Increase Coming To Disney+


The Mouse House has never been shy about charging more for any of its well-loved products, properties, and services.    The Disney lineup includes Star Wars, Pixar, Marvel, Disney's classic animation, the Muppets, Indiana Jones, and more. 

An story from TheStreet.com in The Fort Worth Star-Telegram reports Disney has the IP to get people to pay for its streaming network, visit its theme parks, and see its movies. The company doesn't really control the price of movie tickets and the pandemic made raising theme park prices (at least ticket prices) tricky, but Disney CEO Bob Chapek made it clear that Disney+ won't cost $8 a month or $80 a year forever. 

Disney clearly wants to make Disney+ a draw for people and it has even taken movies that were intended to be theatrical releases -- including the just-released "Turning Red" from Pixar -- on the streaming service. The company has devoted billions of dollars to creating programming for Disney+, but the pandemic did cause it some problems, Chapek said during his company's first-quarter earnings call. 

"We maintain that we offer an extraordinary price/value relationship around the world for Disney+. Obviously, the last few years, pretty much the entirety of the launch of Disney+ has been plagued by COVID-related production interruptions," he said. The pandemic made producing television shows a challenge but it also led to Disney using films like "Mulan," and "Hamilton" as drivers to get people to sign up for its streaming service. Hamilton was included in the regular price while "Mulan," cost an extra $30 while the film also played in theaters. 

Chapek noted that even though the pandemic caused some production delays, Disney has reached one of its major goals. "Plus, in all fairness, our own recognition that we needed to essentially double our production output. You put those two things together, and we certainly have less content than we want. But as we've said over the last few earnings calls, that will rectify itself in the second half of this year. We've already reached one of our two goals," he said. "One of the goals was to go ahead and ensure that we had a new title every week, and we've achieved that."

Chapek made it clear that any price increase would be tied to the company hitting its second goal. 

"By 2023, we want to get to a steady-state, which is even higher than we have right now," he said. 

"And I think that will give us the impetus to increase that price/value relationship even higher and then have the flexibility if we were to so choose to then look at price increases on our service. But it's all about content, content, content." 

More content, according to the CEO means more value, and that justifies higher prices. "And we are bullish about our future content going forward, not only in terms of quality but also in terms of quantity. And that's really what's driving our bullishness for what we might see as the pricing power that we would have going forward," he added.

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