Disney+ Ad Tier to Launch in December for $7.99 Per Month, Hulu Price to Increase

Disney’s premium ad-free service price to rise to $10.99 per month

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Iman Villani as Kamala Khan in Ms. Marvel (Marvel Studios/Disney+)

The streaming wars are all about strategy and pricing power and were a major emphasis of The Walt Disney Company’s third-quarter earnings report Wednesday.

Disney+’s long-awaited ad-supported streaming tier will launch Dec. 8 at $7.99 per month, the same price that Disney+ customers are already paying. In turn, the cost of the premium ad-free tier is rising $3 to $10.99 per month. Hulu is also raising prices with its ad-supported tier increasing $1 to $7.99 per month and its ad-free tier hiking costs by $2 to $14.99 per month. This way, ad-free Disney+ subscribers can’t cancel for a cheaper alternative.

“We continue to transform entertainment as we near our second century, with compelling new storytelling across our many platforms and unique immersive physical experiences that exceed guest expectations, all of which are reflected in our strong operating results this quarter,” Disney CEO Bob Chapek said in a statement.

This marks the most significant Disney+ price increase since it launched in November 2019. The company previously raised the streamer’s prices by $1 in March 2021. However, the Disney Bundle — which includes ad-free tiers of Disney+ and Hulu as well as ESPN+ — will remain $19.99.

On top of these changes, Disney is rolling out new bundle plans. The first is an ad-supported combination of Disney+ and Hulu for $9.99 per month and the second is an ad-supported collection of all three services for $12.99 per month.

Creative and flexible bundling remains a key tactic for providing consumers with ample choice that appeals to an array of financial demographics. Last week, Warner Bros. Discovery announced it will combine HBO Max and Discovery+ into one supersized streaming service that will launch in the U.S. next summer.

While Disney’s direct-to-consumer revenue in the quarter rose 19% to $5.1 billion, operating loss also increased from $887 million in Q2 to $1.1 billion this quarter. With subscriber growth slowing in the domestic market across all of streaming, flexible bundling and price hikes are a way to attract more paying customers and increase the service’s average revenue per user.

Disney+ added an impressive 14.4 million new subscribers in Q3, bringing its worldwide total to 152.1 million. Hulu, which is not an international service, added 600,000 new customers to bring its total to 46.2 million while ESPN+ grew by 500,000 to 22.8 million. Overall, Disney now boasts 221 million global streaming customers (though bundle subscribers are counted three times), more than Netflix’s 220.7 million paying customers. This growing demand enables the company to flex its pricing power muscle.

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