Disney+ to launch ad-backed version in Canada this year, while raising price for other tiers

Disney is raising the price of its streaming service Disney+ around the world, but it plans to offer a cheaper version supported by advertising in Canada starting in November.

The company already offers an ad-based version in the United States but will roll it out to Canada and other markets beginning in November. U.S. price increases for tiers without ads will raise the monthly cost by $3 US, or roughly 27 per cent, to $14 US.

The cost of ad-free Hulu will likewise rise $3 to almost $18 — a 20 per cent hike that will make it more expensive than the most popular ad-free tier at Netflix.

Prices are also going up in Canada. An ad-supported tier will launch for $8 Cdn a month starting in November, while an ad-free version with HD content on up to two devices will cost $12 and 4K content on up to four devices will cost $15. The latter two are up by $3 from the current prices.

Disney CEO Bob Iger acknowledged that the price hikes are intended to steer consumers toward cheaper ad-supported versions of these services, in order to keep them as customers. The advertising market for streaming is "picking up," he said, noting that it's healthier than traditional TV ads. "We're obviously trying with our pricing strategy to migrate more subs to the advertising supported tier."

Disney's announcement of new pricing plans for its streaming service comes as the company reported financial results showing it's losing customers and money in its legacy businesses.

Overall, Disney reported a four per cent increase in revenue for the quarter but swung to a net loss of $460 million US from a year-earlier profit of $1.4 billion. Disney shares gained about four per cent to just over $91.

While Disney lost less money on Disney+ in the quarter, the service is still unprofitable. Outside the U.S. and Canada, it lost subscribers for the third quarter in a row — notably in India, where more than 12 million customers left the service after it lost the rights to Indian Premier League cricket matches.

The service had 146.1 million international customers in its third quarter, a 7.4 per cent decline from the 157.8 million it reported in the second quarter. 

Iger didn't provide details about a crackdown on password-sharing beyond saying that Disney could reap some benefits in 2024 — although he added that the work "might not be completed" next year and that Disney couldn't predict how many password sharers would switch to paid subscriptions.

Some analysts doubted whether price hikes and getting tough on password sharers can do much to lead Disney back to sustainable growth. Paul Verna, an analyst with Insider Intelligence, said in a note that its moves aren't likely to calm investors "anxious for clarity on the company's strategy for its streaming services and TV networks."

The changes to the streaming business come as the company continues to decline on its conventional TV business, which includes sports channel ESPN and the ABC television network.

Higher sports programming production costs and lower revenue due to cord cutting dragged down the performance of its cable channels. TV revenue fell seven per cent to $6.7 billion. That contrasts with revenues from its direct-to-consumer businesses like Hulu and Disney+, which reported a nine per cent increase to $5.5 billion.

Iger, who returned in November to take over the CEO post from Bob Chapek, has worked over the past several months to turn around Disney's streaming business while making sure that the financial might of its theme parks doesn't waver.