Walt Disney co.’s ESPN+ will jack up the monthly price for the live sports streaming service, hoping customers won’t mind shelling out 43% more next month.
This article was originally published by ZeroHedge.
Bloomberg reports the cost of an ESPN+ subscription will jump from $6.99 per month to $9.99, effective on August 23. For those who pay yearly, the price will increase by $30 to $99.99.
The imminent price hike comes as ESPN+ subscribers have nearly doubled since last year, from 13.8 million in April 2021 to 22.3 million in the most recent earnings report. Subscriber growth noticeably increased during the pandemic and after it ended as sporting events returned — before the increase, the platform had years of horrendous subscriber growth.
One reason for the price increase is the streaming service has acquired a slew of media rights for live sports events that have become more expensive. This strategy to secure rights and exclusively flaunt sporting events on the platform is wonderful, but it’s still a money-losing business. In today’s macro environment, the market doesn’t reward profitless companies.
The new cost structure could push subscribers to purchase Disney’s streaming service bundle, including ESPN+, Disney+, and Hulu, which costs $13.99 a month, or $4 more than the new ESPN+ monthly price. It appears there was no increase in the bundle’s price.
ESPN+ spent $2.8 billion for seven years of NHL media rights and has been a wild success, according to ESPN SVP of Programming & Acquisitions Ilan Ben-Hanan, told Yahoo Finance last month.
“When we look at the numbers over this whole hockey season, the NHL has been a huge part of our success.
“Of course, there’s been lots of other great exclusive events on ESPN+ in that time. But we certainly recognize and value that hockey fans have come to recognize ESPN+ as a home for them,” Ben-Hanan said.
The streaming service also acquired media rights for the PGA Tour, UFC, and lacrosse’s two biggest professional leagues. It just recently obtained a yearly broadcasting deal with Formula 1.
Disney’s decision to hike prices comes as a recent quarterly survey from research company Kantar found that streaming services per American household have hit a brick wall amid the worst inflation in four decades.
Netflix’s 1Q22 earnings report revealed the first subscriber decline since 2011. The streaming giant reports next week and may show even more declines.
Two trends are converging as a perfect storm develops. The first is a supercycle in streaming that appears to be faltering. The second, raising monthly prices in the worst inflation in decades when consumer gloom is skyrocketing and discretionary spending is receding, might be problematic for EPSN+ next month as consumers rethink their subscriptions.