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Earlier this week, Disney+ CFO Christine McCarthy revealed a few plans for the company for the remaining three quarters of 2023.
This news comes after the reported "subscriber loss" Disney+ experienced in the first quarter of this year, which came right after another price shift for the streaming platform's subscriptions. Losing the rights to broadcast the Indian Premier League cricket has also been reportedly one of the major factors to the decrease in revenue and subscription number, considering this sports league brings in about 370 million fans worldwide who watch the league through several platforms, streaming or cable.
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The first order of business was taking care of the implications with Hulu, of which Disney owns 67% of the majority shares. Hulu is also being used as another platform that can broadcast Disney-made content, and this move has pushed internal leadership to reconsider the content being made, which in turn lead to a stricter curation of said content:
“We are in the process of reviewing the content on our DTC [Direct-to-Consumer] services to align with the strategic changes in our approach to content curation. As a result, we will be removing certain content from our streaming platforms, and currently expect to take an impairment charge of approximately $1.5 to $1.8 billion. The charge, which will not be recorded in our segment results will primarily be recognized in the third quarter as we complete our review and remove the content. Going forward, we intend to produce lower volumes of content in alignment with this strategic shift.”
- Christine McCarthy, Disney CFO.
Considering the loss in subscription revenue, the company has also moved to further evaluate subscription prices and the types of subscriptions they can offer. Previously this year, they had just moved their subscription prices from US$7.99 to US$10.99, which has reportedly led to the decrease in numbers for the first quarter of 2023.
“The pricing changes we've already implemented have proven successful, and we plan to set a higher price (for) our ad-free tier later this year to better reflect the value of our content offerings. (Disney will) continue optimizing our pricing model to reward loyalty and reduce churn, to increase subscriber revenue for the premium ad-free tier and drive growth of subscribers who opt for the lower cost ad-supported option. 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 de minimis. It was some loss, but it was relatively small. That leads us to believe that we, in fact, have pricing elasticity”
- Bob Iger
Fans have already become quite nervous regarding the type of content which will allegedly be removed. However, this type of philosophy for the future seems to align with Marvel's MCU Phase 5 plans themselves, considering the last few shows created for the MCU have not been met with unanimous appraisal. Many fans and critics alike have mentioned they would rather have less content overall in a time period if the content had better quality.
This could also be a move aiming at already preventing many of the issues regarding Writing Rights and Streaming platforms that have come up to the surface considering the Writers Guild of America strike that has just started in this past week.
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Only time will tell if Disney's plans will create better scenarios and numbers ahead.
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