In a recent announcement, The Walt Disney company revealed its plans to raise prices for its streaming services, including Disney+, Hulu, and ESPN+. While some may question this decision as the streaming business sets foot into profitability for the first time, Disney remains unwavering, stating that the price increase is well-earned.

Effective from October 17, subscription prices for ad and ad-free options on Disney's streaming platforms will experience an increase of up to 25%, varying depending on the plan selected. This comes after previous price hikes in October 2023 and August 2022. During Disney's Q3 2024 earnings call, Chief Financial Officer Hugh Johnston emphasized that the higher prices are justified, citing the availability of current and upcoming content as a key factor.

"We do feel like we've earned that pricing in the marketplace, and we feel positively about that. With that will come scale benefits. The product improvements also should reduce churn and keep our consumers with us as they're evaluating their options," explained Johnston.

Disney CEO Bob Iger further supported the price increase, noting that upcoming features like new live channels and movies contribute to the company's growing streaming "pricing leverage." As Disney and other streaming businesses shift focus from subscriber growth to factors such as user engagement and profit margins, the company feels empowered to make these moves, even if there is a potential risk of losing some subscribers.

Despite concerns over potential customer pushback regarding the price hikes, Iger reassured investors, stating, "We're not concerned. The goal is to grow engagement on the platform. And what I mean by that is obviously offering a wider variety of programming." Disney believes that by expanding their content offerings, they can mitigate any negative impacts and continue to attract and retain subscribers.

Interestingly, Iger revealed that previous price increases did not lead to significant churn, with only modest cancellations reported. This contradicts the high churn rates seen in the streaming industry, where subscribers often cancel after watching preferred content until new, desirable content is added.

Furthermore, Disney has not encountered major backlash to its recent efforts to crack down on password sharing. The company began implementing stricter measures earlier this year and plans to continue in a more earnest manner from September onwards. Despite concerns that this move could alienate some users, Disney claims that the response has been reasonably positive.

As Disney's streaming business becomes profitable, the company remains confident in its ability to justify the price hikes. With a focus on enhancing user engagement through a variety of programming and expanding content offerings, Disney aims to solidify its position in the competitive streaming industry.

Please note that this article is based on information provided during Disney's Q3 2024 earnings call and does not include any additional details beyond what was disclosed.