Jul 17, 2022 - Economy

Disney to raise ESPN+ price to $9.99 per month

Photo: Jakub Porzycki/NurPhoto via Getty Images

Disney is increasing the price of its sports streaming service ESPN+ from $6.99 monthly to $9.99 monthly, a 43% increase.

Why it matters: The price hike, beginning Aug. 23, will help make the service more profitable as live programming costs increase.

Catch up quick: When Disney launched ESPN+ in 2018, the service was mostly a repository for ESPN's on-demand shows and a little bit of live content.

  • Now, the streaming app has over 22,000 live sports events, including exclusive soccer, hockey and golf rights.
  • Last year alone, ESPN inked a $2.7 billion, eight-year deal renewal for "Monday Night Football," a $1.4 billion, eight-year deal for La Liga soccer matches, and a $2.8 billion, seven-year deal for NHL rights, in addition to other smaller deals.

Between the lines: The price hike is the largest since ESPN+ debuted four years ago — a reflection of ESPN's increased investments in live rights.

  • The service debuted at $4.99 monthly and has gradually increased as more live sports rights were added. Disney hiked the cost by $1 in August 2020 to $5.99 monthly and then increased it again to $6.99 monthly in July 2021.

Be smart: It's worth noting that the price increase does not impact the cost of the Disney Bundle, which includes Disney+, Hulu and ESPN+ for $13.99 monthly. UFC pay-per-view events will also not increase in price.

  • In closing the gap between the standalone price of ESPN+ and the full Disney bundle, Disney may be able to add more subscribers to its other streaming services.
  • Disney surpassed 200 million paying subscribers across all of its streaming services last quarter, with 22 million for ESPN, 137 million for Disney+ and 45.6 million for Hulu Live and On-Demand. The milestone puts Disney on pace to reach its 230 million to 260 million Disney+ subscribers by the end of 2024.

The big picture: Streamers have been known to periodically increase their subscription costs once they reach a certain threshold of subscribers.

  • For most companies, increasing costs is the easiest way to increase profitability, especially in saturated markets.
  • Disney still doesn't make money on its streaming division, and its streaming losses widened during the first quarter of 2022.

What to watch: As the market downturn continues, entertainment companies will face more pressure to show Wall Street they are able to turn streaming bets into profitable business lines.

  • For sports media companies, this is particularly tricky, given that live sports are the only remaining type of content that continues to bring in strong linear TV viewership.
  • While ESPN has added a lot of new live sports rights to its streaming service, its most critical live games remain on live television.

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