Disney stock rose about 5% Thursday after posting a beat on earnings, profit, streaming subscriber growth and parks for its fiscal third quarter ended in June.
It announced a new Disney+ ad-supported tier will launch on Dec. 8 for $7.99 – the current price of the ad-free service, which will jump to $10.99.
That’s nice if you can get it.A 40% hike “greatly widens the range of potential outcomes for Disney over the next two years,” says analyst Doug Creutz of Cowen.
He thinks Disney+ was underpriced at launch at $6.99, “but the $3 price hike here seems very aggressive, especially at a time when economically pressured consumers are cutting back discretionary spending.”Douglas Mitchelson of Credit Suisse says the key will be “generating greater streaming revenue growth via the upcoming price increases flowing through without meaningful churn” – that’s canceling or pausing subscriptions and it’s exceedingly easy to do with streamers.On a post-earnings call, CEO Bob Chapek said the company isn’t anticipating meaningful churn, calling Disney+ the best value in streaming with “plenty of room on price-value.” Plus, consumers can keep the price steady by shifting to the ad-supported tier.
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