Breaking it down: why Disney is hiking prices for Hulu and Disney+

If you like streaming Disney shows and movies without commercials, be prepared to pay more for the privilege.

On Thursday, the Mickey Mouse company announced it will soon raise prices across its three streaming services — Disney+, Hulu, and ESPN+. This means that customers who pay extra to enjoy ad-free interruptions will have to shell out a little more cash for that privilege.

The new prices will primarily impact streamers who watch the ad-free version of Hulu and Disney+, which will increase by $3. Cord-cutters who watch live TV channels on Hulu will also see the cost of service go up, as will fans of sports who watch games on ESPN+.

Here is a look at the new prices across Disney’s streaming services, starting October 12, 2023:

Service	Monthly Price	Annual Price
Disney+ (with ads)	$8	—
Disney+ (without ads)	$14	$140
Hulu (with ads)	$8	$80
Hulu (without ads)	$18	—
Hulu (with ads) + Live TV	$77	—
Hulu (without ads) + Live TV	$90	—
ESPN+	$11	$10

Streamers can save money if they are willing to bundle services together, but the price of some bundles will also increase starting October 12:

Service	Monthly Price	Annual Price
Disney Duo Basic (Disney+ with ads & Hulu with ads)	$10	—
Disney Duo Premium (Disney+ without ads & Hulu without ads)	$20	—
Disney Trio Basic (Disney+ with ads, Hulu with ads & ESPN+)	$15	—
Disney Trio Premium (Disney+ without ads, Hulu without ads & ESPN+)	$25	—

The new Disney Duo packages will debut on September 6, 2023. Existing customers can switch to the new Duo plans on their monthly or annual renewal date.

Two reasons: Because they need the money and because they think they can.

To the first point, Disney has spent tens of billions of dollars on streaming content — from hit shows like “The Mandalorian” and “Wandavision,” to forgettable series like “Diary of a Future President” and “Just Beyond.”

On paper, Disney’s streaming strategy sounded solid early on: Make as much content as possible, and people will spend an endless amount of time browsing through its thousands of classic movies and upcoming series.

Turns out, what people really want are comfort shows and movies — series, and films they can watch over and over again. And Disney just didn’t produce enough of those for its streaming platform.

Meanwhile, Disney has spent quite a bit of money securing live sports rights for ESPN+, including out-of-market National Hockey League games, USL Championship soccer matches, and other events.

And while its top-tier sports are still relegated to the ESPN cable channel (which isn’t available on ESPN+, at least not yet), there is still a significant cost with delivering all that live sports to streamers who pay less than $10 a month to access them.

All of that investment has earned Disney hundreds of millions of global subscribers across their three services — and Disney has yet to see $1 in profit from their streaming business.

Earlier this week, the company revealed it lost $512 million on streaming — which is better than the $659 million it lost earlier in the year but not enough to satisfy investors (its stock price has not gone above $100 per share since early May).

So, if you’re Disney, what do you do?

The answer is simple: charge customers more.

Since returning to Disney as its top executive last year, CEO Bob Iger has been pretty vocal about his belief that Disney can charge more for its premium content — classic movies, hit television shows, and live sports.

He reached this conclusion after a price hike last year ultimately resulted in a few customers leaving Disney+ for other services.

“We were pleasantly surprised that the loss of subs due to what was a substantial increase in pricing for the non-ad supported Disney+ product was [minimal]. It was some loss, but it was relatively small. That leads us to believe that we, in fact, have pricing elasticity.” – Disney CEO Bob Iger, Q2 2023 Conference Call

But Iger said raising prices was only one half of the strategy. The other half? Getting people to watch ads. If streamers are opting for the ad-free version of Disney+ and Hulu, the company can only make money on them once — when they pay their monthly subscription.

But if Disney can convince streamers to opt for the ad-supported versions of their services, they make money on customers every single day that they stream content.

If you’re a business, two streams of revenue are obviously better than one. So, with that in mind, Iger said Disney was going to implement price hikes on their ad-free streaming plans while keeping the cost of ad-supported plans low because Disney wants more customers to stream content with ads.

“I think one of the things that we not only have discovered, but that we believe we have to do, is that we’ve got to widen the delta between the ad-free service and the non-ad supported service. Because we clearly would like to drive more subs to the ad-supported service.”

Disney is hoping price-conscious consumers — those who don’t want to shell out $14 to $25 a month for commercial-free plans and bundles — will switch to the ad-supported versions.

And those who don’t? Well, Disney is hoping the price increases offset the costs of not generating ad revenue off the backs of those streamers.

Either way, the company is hoping to improve the revenue brought in from streaming, so it can reverse its losses and ultimately turn a profit. And it wants to do that by next year.

For many of the same reasons above, Disney is hiking the price of its Hulu with Live TV service, with streamers now paying between $76 and $90 per month to watch live television content alongside Hulu’s on-demand catalog of movies and TV shows.

There is one other reason why Disney is raising the price of its live TV service: The cost of offering live broadcasts and cable channels is going up for them.

Programming rates have steadily increased since the mid-2000s, with fees charged to cable and satellite companies for the right to retransmit channels outpacing the rate of inflation.

When cable and satellite companies are charged higher programming fees, they pass the cost on to customers — which results in higher bills.

For years, TV fans have ditched cable and satellite services for cheaper streaming options like Hulu with Live TV. But the same economics that is responsible for crazy fees across cable and satellite are starting to catch up with streaming cable TV replacement (and the situation could get even worse if broadcasters have their way at the FCC).

Hulu with Live TV offers the very channels that are responsible for high cable and satellite fees: Broadcast network affiliates from ABC, CBS, Fox, and NBC, and cable channels like ESPN, Fox Sports 1, Fox News Channel, Nickelodeon, CNN, TBS, and TNT.

The cost of carrying those channels always trickles down to consumers.

Cord cutting vs. traditional cable – they’re practically the same now.

Hulu with Live TV hardly stands alone: Every streaming cable replacement — including YouTube TV, Fubo, DirecTV Stream, Vidgo, Philo, Frndly TV, and Sling TV — has raised their subscription price to offset higher programming fees.

The services that offer live news and cable channels, like Hulu with Live TV, typically see the largest increases, while those that don’t (like Philo and Frndly TV) generally see a more modest bump in prices.

Disney tries to make up for the high cost of live TV by offering a nice perk to subscribers of Hulu with Live TV: Free access to their other streaming services.

Customers who pay $77 a month for Hulu with Live TV get the ad-supported version of Disney+, while those who want live TV channels with ad-free access to Hulu’s on-demand catalog also get the ad-free version of Disney+. Both plans also include ESPN+.

This means if you’re already paying for a streaming cable replacement like YouTube TV or Fubo and you enjoy Hulu, Disney+, and ESPN+, switching to Hulu with Live TV makes sense because the perk of getting all three services will save you a little money each month.

For everyone else, though, there are better options.

Have any thoughts on this? Drop us a line below in the comments, or carry the discussion to our Twitter or Facebook.

Editors’ Recommendations:

• The best streaming services (2023)
• What is the best streaming service?
• How to cancel your subscription to Disney Plus
• How to cancel your ESPN+ subscription

Just a heads up, if you buy something through our links, we may get a small share of the sale. It’s one of the ways we keep the lights on here. Click here for more.