On Friday, Hulu began informing Hulu + Live TV subscribers that beginning Dec. 21, their subscriptions will now include access to Disney Plus and ESPN Plus.
With the additions, the price of Hulu + Live TV plans will go up by $5 per month: Hulu + Live TV with on-demand ads will be $69.99/month and Hulu + Live TV with no ads will be $75.99/month. The change applies to both new and existing customers.
For Hulu + Live TV customers who already have Disney Plus and/or ESPN Plus, those accounts will roll into their new plan on Hulu (as long as the email addresses are the same for each account). In addition, those subscribers will receive a credit for the retail value of their existing subscription(s), starting with their first billing cycle on or after Dec. 21.
Why is Disney doing this, knowing full well that it will anger a certain number of Hulu + Live TV customers — who have been subjected to a regular cadence of price hikes — and prompt them to cancel their service?
Disney is eager to prove to Wall Street that its major strategic investment in Disney Plus is still on a healthy growth curve, particularly in the U.S., after the Mouse House drastically missed estimates for the September 2021 quarter. As of Oct. 2, Hulu + Live TV had 4 million paid subscribers, so the move will instantly add some number of subs less than that (because of subscriber overlap) to Disney Plus and ESPN Plus tallies in the year-end quarter. Also, you can expect a higher level of churn for Hulu + Live TV given the price increase.
Hulu is positioning the addition of Disney Plus and ESPN Plus as providing more value to Hulu + Live TV subscribers. True, the packaging represents an even bigger discount than the three-way bundle of Hulu SVOD-only with ads, Disney Plus and ESPN Plus for $13.99/month (36% less than purchasing them separately). That said, bundling the two streamers for an additional $5 per month with Hulu’s pay-TV packages will only drag down the average revenue per subscriber (ARPU) for both Disney Plus and ESPN Plus.
Meanwhile, Hulu + Live TV appears to be hitting a growth plateau. It gained 300,000 subscribers sequentially during the September quarter, but dropped about 100,000 year-over-year, down 2% from 4.1 million the year earlier. Overall, Hulu customers (91% of whom are on SVOD-only plans) rose 20% on an annual basis, to 43.8 million.
Hulu last raised the price of its live-TV packages in December 2020, when they were bumped up by $10/month. In October, Hulu raised the price of its on-demand plans by $1 for both current and new subscribers, with the ad-supported tier rising from $5.99 to $6.99 per month and Hulu (No Ads) increasing from $11.99 to $12.99.
Hulu + Live TV packages include more than 75 live TV channels, including local ABC, CBS, Fox and NBC stations in virtually all U.S. markets, plus accesso to Hulu’s VOD library of more than 100,000 on-demand movies, TV episodes and original series.