It sounds like your favorite streaming services are about to get more expensive
- Disney's CEO said Disney+ is "underpriced" on Tuesday.
- In August, Disney+ announced that it would be hiking prices by 38%.
Get ready to shell out a few more dollars for your Disney+ subscription — and don't be surprised if other streaming services hike their prices soon as well.
Disney CEO Bob Chapek said Tuesday that streaming services are "underpriced" at a gathering of media and tech executives hosted by Goldman Sachs.
"The launch of Disney+ at that introductory price was pretty absurd," he said. "It was so attractive to the consumer."
Since the launch of Disney+ in 2019, Chapek believes the company has invested so much into developing content that increasing prices "even in big chunks" should not change its value to the consumer.
He's also betting on the fact that "churn"— the number of subscribers who cancel a service— isn't likely to increase even with higher prices.
In August, Disney announced that it would be raising its monthly subscription fee, currently $7.99 a month, by almost 40%. Back in January, Netflix announced that it would be increasing its prices. Since late March, it's been raising rates for existing subscribers on a rolling basis, according to The Verge.
And Chapek is not the only media executive feeling the heat of rampant inflation— which has hiked the prices of everything from gas to olive oil to cosmetics over the past few months.
Warner Bros. Discovery CFO Gunnar Wiedenfels, who also spoke at Tuesday's gathering, said the company's two most popular streaming services are "fundamentally underpriced."
The ad-free version of HBO Max is $14.99 a month and $9.99 with ads, while Discovery+ is $6.99 a month without ads and $4.99 a month with ads.
Wiedenfels added that the company might be hiking prices once it launches its streaming service combining HBO Max and Discovery+ in mid 2023. He declined to comment on the exact number.
The new service will also have price tiers depending on the number of ads. Wiedenfels said that the company usually makes more money off a subscriber paying for a streaming service with ads than without.
"There is a sweet spot here at perfect product market combination because you have these segments of viewership in almost every market that are not going to be willing to pay at all," he said.
That means that the company is prepared to lose a few subscribers once the new streaming service hits the market.
"We've also been very clear that we're not optimizing for subscribers," he said. "We're optimizing for a long-term sustainable business."
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