According to Disney’s Chief Financial Officer Christine McCarthy, the company will reduce its content production and remove some existing content from its streaming services.
Disney also announced that it would raise the price of Disney+ even after losing four million subscribers due to the lack of Indian Premier League cricket streaming rights.
Deadline reports that McCarthy revealed after the earnings report that Disney will remove some of its existing content from its streaming services and make less new content.
The reason for this is to make sure that the content Disney streams match their current strategies. Here is what McCarthy said:
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.
Disney also plans to raise the price of Disney+’s ad-free service, even though the previous price hike for Disney+ affected the subscriber growth in the second quarter of the company’s fiscal year.
Currently, the ad-supported tier of Disney+ costs $7.99, and the ad-free tier costs $10.99. Bob Iger, Disney’s CEO, confirmed the plan on Wednesday’s call after the earnings report:
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.
He also said that Disney would keep adjusting the pricing model to reward loyal subscribers, reduce cancellations, and popularize the cheaper ad-supported option.
Iger explained that while the price increase affected the subscription growth, it was not a significant effect:
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.
This plan is similar to what another streaming service, HBO Max, has done, which has upset many subscribers. However, McCarthy did not say what content would be removed from streaming or which services would be affected by the new plan.
Disney+ is Disney’s leading streaming platform, with big franchises like the Marvel Cinematic Universe and Star Wars. Reportedly, these big franchises will be rehauled and modified according to Disney’s new plan. However, since they have a majority stake in Hulu, some content from Hulu may also be taken off in the future.
Disney wants to ensure all the content they produce is easy for consumers to access, as they plan to merge Disney+ and Hulu content in one app.
The titles that will be removed will probably be content that didn’t do well compared to the top shows on Disney+ and Hulu. Older titles that don’t attract many viewers could be some of the first to be removed. Doing this would ensure only the most successful TV shows and movies would stay on both platforms.
Disney’s plan to make less content matches the new MCU Phase 5 show release plan, which will have fewer series produced for Disney+ each year.
Less content from Disney on streaming means shows and movies will have more time to fix any glaring quality problems they may have.
By deciding to take off some content and produce less for its streaming services, Disney is focused on creating a library of high-quality, popular content for its customers.