As the Walt Disney Company reported its 4th quarter earnings last week, Disney’s stock price plunged to a 2-year low.

Days later, Disney announced a hiring freeze and “some small staff reductions” to slash costs. One of the biggest issues for Disney investors is Disney’s streaming video business and its mounting losses.

Disney CEO Bob Chapek and CFO Christine McCarthy assured investors that they expect Disney’s streaming business to be profitable in 2024. They cited the soon-to-launch ad-supported tier for Disney+, as well as potential cuts to marketing budgets and an established content pipeline as the path to profitability. But there was another revenue stream mentioned in the earnings call discussion: price increases.

When questioned by an investor about whether price increases would result in more “churn” — the financial industry term for the number of subscribers who stop paying for/cancel your service in a given time period — Chapek said that YOU (subscribers, that is) will pay more for Disney+ and not cancel.

“Our history shows that when we’ve taken price increases across our streaming businesses, that we don’t meaningfully increase churn or cancellations,” Chapek said.

What’s more, Chapek said you aren’t paying enough for Disney’s flagship streaming service right now. “We launched these services at tremendous values to the consumer,” he said. “So, we believe we’ve still got some headroom there.”

(Hint: “headroom” = “you’ll still pay more than even the next planned increase”)

When the price of a regular subscription to Disney+ increases to $10.99 per month on Dec. 8, Disney will also introduce a lower-priced, ad-supported tier for $7.99 per month. This follows moves by Netflix, which introduced an ad-supported tier on Nov. 3.

However, while the price of a Disney+ subscription has historically been less than the price to subscribe to Netflix, Disney’s ad supported tier will cost $1 more per month than Netflix’s.

The losses for Disney+ to this point have been steep — if you count Hulu and ESPN+, Disney’s streaming business lost more than $4 billion in Fiscal Year 2022, and its 4th Quarter 2022 losses of nearly $1.5 billion way more than double the $630 million in losses reported in the 4th Quarter 2021.

While pretty much all streaming services are expected to operate in the red at start-up, financial analysts are seem to have varying degrees of confidence in Disney’s estimates of when Disney+ will become profitable.

PP Foresight analyst Paolo Pescatore said the sheer size of Disney’s operations make introducing streaming tough and costly, telling the Hollywood Reporter the latest earnings report “underlines the challenges a media giant faces in pivoting towards a streaming future.”

Jeff Marks of CNBC said he was “shocked and stunned by the poor performance” in Disney’s latest earnings report, and was among some voices calling for a leadership change.

But Tim Nolen, an analyst for Macquarie, told Yahoo Finance that Disney’s size — and its ability to absorb losses because of its other highly profitable businesses such as theme parks — makes Disney “the one company that can probably do the transition (to streaming) effectively, and may even come out on top.”

How much is Disney+ actually losing and does it matter? Get all the details here.

For what it’s worth, Walt Disney Company leadership continues to stand by its estimates that its streaming services will turn a profit at some point in Fiscal Year 2024. “We believe that we’ve got a formula that gives us great confidence that we’re going to achieve the guidance that we communicated,” Chapek said during the November 8th earnings call.

But subscribers should expect to see another price increase or two in that formula. Keep following DFB for the latest news on the Walt Disney Company.

Click here for more about how Disney+ stands to make billions from advertisers.

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The post Bob Chapek Says You’ll Pay More for Disney+ first appeared on the disney food blog.