Disney+ raised prices because the company needed more revenue to pay for original content, cover operating costs, and offset losses from the streaming wars

Disney+ has raised prices multiple times since launching in 2019. The service went from $7.99 per month at launch to $10.99 for ad-free viewing as of late 2022, with a cheaper ad-supported tier at $7.99. In October 2023, Disney raised the ad-free plan again to $13.99 per month. These increases happened because streaming services burn through enormous amounts of money—Disney spent billions on shows and movies, server infrastructure, and licensing deals, and the company needed subscribers to pay more to cover those costs.

The streaming market also changed. In 2019, Disney+ was new and cheap to attract viewers. By 2022 and 2023, the company had built a large subscriber base and faced pressure from investors to turn a profit. Netflix had already shown that subscribers would accept price increases if the service offered enough content they wanted to watch. Disney followed that playbook.

Key Takeaways

  • Disney+ introduced an ad-supported tier at $7.99 per month in late 2022 to keep a low-price option while raising the ad-free plan to $10.99.
  • The October 2023 price increase raised the ad-free plan to $13.99 per month, while the ad-supported tier stayed at $7.99.
  • Disney spent billions on original shows and movies like The Mandalorian, Andor, and Loki, which required higher subscription revenue to justify.
  • Streaming services operate at a loss until they reach a certain subscriber count and can raise prices without losing too many customers.
  • The company also bundled Disney+, Hulu, and ESPN+ at discounted rates to encourage subscribers to pay for multiple services at once.

How streaming services use price increases to reach profitability

Streaming is expensive to run. Disney+ needs to pay for servers, bandwidth, customer support, and licensing agreements with studios and networks. On top of that, Disney spent an estimated $30 billion on content across all its streaming services in 2022 alone. That money goes to writers, actors, directors, producers, and post-production crews. A $7.99 monthly subscription does not cover those costs when spread across millions of subscribers.

Most streaming services launch at a low price to build a large subscriber base quickly. Once they have millions of paying customers, they raise prices because research shows that most subscribers will stay even after a modest increase. Netflix proved this model worked—the company raised prices repeatedly and kept most of its audience. Disney watched Netflix succeed and applied the same strategy to Disney+.

The goal is to reach a point where revenue exceeds spending. Disney has not publicly stated that Disney+ is profitable, but the price increases suggest the company believes it is getting closer.

The shift to ad-supported tiers and bundle pricing

In late 2022, Disney introduced a new strategy: offer a cheaper ad-supported plan alongside the more expensive ad-free one. This let Disney raise the price of the ad-free plan without losing budget-conscious subscribers. The ad-supported tier at $7.99 per month matched the original launch price, so viewers who could not afford the increase had an option—they just had to watch ads.

Disney also bundled Disney+, Hulu, and ESPN+ together at a discount. A subscriber could pay $13.99 per month for Disney+ ad-free alone, or $14.99 per month for all three services with ads on Hulu and ESPN+. This encouraged people to subscribe to multiple services at once and increased the total revenue per customer.

The bundle strategy worked because many households wanted access to all three services anyway. Paying $14.99 for the bundle was cheaper than paying separately for each one, so it felt like a deal even though the base price of Disney+ had gone up.

Content spending and the need for higher revenue

Disney+ launched with a library of existing Disney, Pixar, Marvel, and Star Wars content. But to compete with Netflix and keep subscribers from canceling, Disney needed to produce new shows and movies constantly. The company greenlit expensive originals like The Mandalorian (Star Wars), Loki (Marvel), Andor (Star Wars), and The Bear (general entertainment). Each of these shows costs tens of millions of dollars per season.

Disney also acquired the rights to stream content from other studios and networks. These licensing deals require upfront payments. The company needed higher subscription revenue to justify spending that much on content. Price increases allowed Disney to fund more shows and movies, which in turn justified keeping subscribers on the service.

Competition and subscriber growth slowing down

When Disney+ launched in 2019, the streaming market was less crowded. Netflix was the dominant player, but Disney+ had a unique advantage: access to beloved franchises like Marvel and Star Wars. Growth was fast and straightforward.

By 2022, most households that wanted to subscribe to Disney+ already had. Growth slowed. At the same time, new competitors like Apple TV+, Amazon Prime Video, and HBO Max were spending heavily on content. Disney could not grow by adding new subscribers as easily, so the company shifted focus to making more money from existing subscribers through price increases and the ad-supported tier.

Slowing subscriber growth is normal for a mature streaming service. The price increases reflected Disney's shift from a growth phase to a profitability phase.

What happened with password sharing crackdowns

Around the same time as the price increases, Disney+ began cracking down on password sharing—the practice of giving your login to family members or friends outside your household. Netflix started this crackdown first, and Disney followed. The company introduced paid add-on accounts for people who wanted to share a subscription with someone outside their home.

The password sharing crackdown was tied to the price increases because both served the same goal: increase revenue per subscriber. People who had been sharing one account across multiple households now had to pay for separate accounts or add-on access. This generated additional revenue without requiring new subscribers.

How Disney+ prices compare to other streaming services

At $13.99 per month for ad-free Disney+, the service costs more than it did at launch but less than some competitors. Netflix's ad-free plan costs $15.49 per month (prices vary by region). HBO Max costs $19.99 per month for ad-free viewing. Apple TV+ costs $9.99 per month. Amazon Prime Video costs $14.99 per month or $139 per year.

Disney's bundle strategy makes the comparison more complex. If you want Disney+, Hulu, and ESPN+ all ad-free, the cost is higher than the individual Disney+ plan. But if you were planning to subscribe to multiple services anyway, the bundle is cheaper than paying for each one separately.

The ad-supported tier at $7.99 per month remains one of the cheapest options in the streaming market, which is why Disney kept that price stable even as the ad-free plan increased.

Frequently Asked Questions

Will Disney+ prices keep going up every year?

Disney has not announced a schedule for future price increases. Streaming services typically raise prices when they need more revenue to cover content costs or when subscriber growth slows. If Disney continues spending billions on original content and subscriber growth remains flat, more increases are possible. But the company may also pause increases if competition intensifies or if subscribers start canceling in large numbers.

Is the ad-supported tier worth it to save money?

The ad-supported tier costs $7.99 per month and shows ads before and during shows and movies. If you watch Disney+ regularly, the ads add up. But if you use the service occasionally or are willing to tolerate ads, the savings of $6 per month ($72 per year) may be worth it. The choice depends on how much you value ad-free viewing versus the cost.

Can I get a discount on Disney+ if I bundle it with other services?

Yes. Disney offers a bundle of Disney+, Hulu, and ESPN+ at $14.99 per month with ads on Hulu and ESPN+, or $24.99 per month for all three ad-free. If you were planning to subscribe to multiple services, the bundle is cheaper than paying for each one individually. You can also subscribe to Disney+ alone without bundling.

Why did Disney introduce ads if people are already paying?

The ad-supported tier gives Disney two sources of revenue: subscription fees and advertising revenue from companies that buy ad space on the platform. This allows Disney to offer a cheaper option while still making money from viewers who choose it. It also lets the company charge more for the ad-free tier because the cheaper option exists.

Did the price increase affect how much content Disney+ produces?

Disney has not reduced content spending after the price increases. The company continues to greenlight new shows and movies. The price increases were meant to fund more content, not to reduce spending. However, Disney did lay off thousands of employees across its divisions in 2023, which may affect production timelines and the number of projects in development.