Another major US company is raising prices again, but this time don’t blame inflation.
Disney is raising the price of its streaming products and has signaled that a price hike may be on the way at its theme parks as well. On Wednesday, the company said the price of ad-free Disney+ jumped $3 per month to $10.99 starting Dec. 8. Hulu with ads would jump $1 per month to $7.99, and Hulu without ads would jump $2 per month to $14.99.
Then on Thursday, Disney CEO Bob Chapek told CNBC’s Julia Boorstin that a price hike is likely to happen at theme parks as long as people keep coming in droves.
“We have read the request. We have no plans at the moment as to what we are going to do, but we are operating here with a surgical knife,” Chapek said. “It’s all up to the consumer. If consumer demand holds up, we’ll act on it. If we see an easing, which we don’t think we’re seeing, we can act on it as well.”
Instead of blaming the rising cost of materials, labor, and gas, Disney rationalizes increases based on the continued popularity of its products. Disney said Wednesday that Disney+ added 15 million new subscribers last quarter, beating expectations. It also said it expects further growth for the Disney+ core (excluding Disney+ Hotstar in India) in the next quarter, beyond the 6 million it added to the during its third fiscal quarter.
Raising prices due to high demand is nothing new for Disney. Theme park ticket prices have been climbing for decades. In its most recent quarter, the company saw a 72% increase in revenue from its parks, experiences and products division, topping $7.4 billion. Per capita spending in national parks increased by 10% and is up more than 40% compared to fiscal 2019.
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Disney is strategically capping attendance at its parks, an effort that grew out of attempts to avoid crowding during the Covid pandemic. Moving is a way to improve the customer experience. Additionally, the company added Genie+ and Lightning Lane products, which organize the customer experience and allow visitors to bypass the main attraction lines.
Beyond the parks, Disney asks cable TV providers to pay aggressive price hikes for ESPN every year because it knows there is strong demand for its stable of live sports rights.
Disney+ first launched in November 2019 at $6.99 per month. About three years later, this price will have increased by 57%. The service now has more than 152 million customers.
Chapek has had his share of bumps in the road since taking over from Bob Iger as CEO of Disney. But one thing hasn’t changed: consumers still seem to appreciate what Disney has to offer.
WATCH: CNBC’s full interview with Disney CEO Bob Chapek