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Disney Plus to Increase Prices in Early 2021, Eyes Up to 260M Subscribers by End of 2024

Streaming service hits 86.8 million paid customers a little over a year after launch

Disney Plus - Mandalorian
Lucasfilm

Disney Plus reached a new milestone, hitting 86.8 million paid subscribers worldwide as of Dec. 2 just over a year after its debut. That’s within shouting distance of the high end of the 90 million customers Disney originally expected to land — in year four of the streaming service’s life.

With the strong momentum at Disney Plus’ back, the company now expects the streamer to have between 230 million and 260 million total paid subscribers by the end of fiscal year 2024, CFO Christine McCarthy said at the company’s investor day Thursday, along with other projections. The forecast includes Star subscribers, Disney’s forthcoming international general-entertainment service mimicking Hulu, which are substantially expected to be bundled in with Disney Plus.

McCarthy also announced price hikes: As of March 26, 2021, Disney Plus pricing in the U.S. will increase to $7.99 per month (up a dollar from $6.99 now) or $79.99 per year (vs. $69.99 now). The three-way bundle with Disney Plus, Hulu with ads and ESPN Plus is increasing to $13.99/month, also up a dollar.

In Europe, Disney Plus pricing will go to €8.99 per month (up from €6.99 now), alongside the Star rollout, which debuts Feb. 23. The company said it would make similar price increases in other countries but would not raise rates on existing Disney Plus customers for six months.

The new Disney Plus sub count of 86.8 million is up 13.1 million from the last reported number of 73.7 million paid subscribers globally as of Oct. 3. The direct-to-consumer (DTC) service has become an even more critical pillar for Disney, especially as the COVID crisis has depressed box office and theme park revenue.

“Needless to say, Disney Plus has exceeded our wildest expectations,” Disney CEO Bob Chapek said at the outset of the investor day event. “This success has bolstered our confidence in our continued acceleration toward a DTC-first business model.”

During the presentation, execs also announced that a huge swath of new originals will be coming to Disney Plus under the Star Wars, Marvel, Disney Animation and Pixar brands over the next few years. Going forward, the goal is to have new originals premiere on Disney Plus every week.

As of Dec. 2, Disney overall had 137.1 million direct-to-consumer subscribers, which includes 38.8 million for Hulu (up from 36.6 million two months ago) and 11.5 million for ESPN Plus (vs. 10.3 million as of Oct. 3). Hulu now counts 92 million monthly ad-supported U.S. viewers, more than doubling in two years, Hulu president Kelly Campbell said.

Of the 86.8 million Disney Plus subs, about 30% (or 24 million) are via Disney Plus Hotstar in India, according to Rebecca Campbell, chairman of Disney’s International Operations and Direct-to-Consumer segment. What’s important to note: The average revenue per Disney Plus Hotstar subscriber is much lower than in other regions.

Last month Disney Plus launched in Latin America (where it plans to debut a standalone service called “Star Plus” in June 2021 with live sports). The company expects to intro the Disney Plus/Star integrated package in Singapore in February 2021, followed by Eastern Europe, Hong Kong, Japan, and South Korea later in the year.

Other news: In the first quarter of 2021, Disney Plus and ESPN Plus will be available to Comcast’s Xfinity X1 and Flex more than 20 million subscribers directly on their set-tops, joining the operator’s existing distribution deal for Hulu, Michael Paull, president of Disney Plus and ESPN Plus announced. In addition, ESPN Plus content and subscriptions will be available directly through the Hulu app next year. And, starting in January, Disney Plus subscribers will be able to sign up for a bundle with Disney Plus, ESPN Plus and the ad-free version of Hulu for $18.99/month.

Flash back to Disney’s investor day in April 2019: The Mouse House had projected 60 million-90 million subscribers for Disney Plus by the end of its fiscal year 2024 (which ends around Sept. 30).

The media conglomerate first launched Disney Plus in November 2019. The service quickly gained traction, signing up 10 million by the day after launch and zooming to 50 million subs in its first five months. The service offers a rich library of Disney, Pixar, Marvel and Star Wars movies as well as breakout original series “The Mandalorian” and other exclusive TV shows and movies including “Hamilton” and the live-action “Mulan” (which Disney Plus sold in a 90-day early-access window for $30 a pop).

Besides coming to market with one of the world’s most powerful entertainment brands, a key part of Disney Plus’ appeal has been its relatively low price point of $6.99/month, which led analysts to speculate that the company would eventually hike the price of the SVOD package. That said, the higher $7.99 monthly price is still less than competing services like Netflix or HBO Max.

Prior to Disney’s investor day, some Wall Street analysts had upped their forecasts for Disney Plus subscriber growth. But they will have to adjust those: For example, Morgan Stanley revised estimates for Disney Plus to end fiscal year 2024 with 135 million customers and FY25 with 145 million — well below the new sub targets the company outlined today.