Disney Challenge–$19.99 Streaming

By Douglas A. McIntyre Updated Aug 19, 7:12AM EDT · Published Aug 18, 7:51AM EDT

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Disney Challenge–$19.99 Streaming — © 2009 Disney Enterprises, Inc / Getty Images Entertainment via Getty Images

24/7 Wall St. Insights

Walt Disney Co. (NYSE: DIS | DIS Price Prediction) has raised the prices of most of its streaming packages.
Even so, it may not get its investment in streaming back for a decade.
Also: Dividend legends to hold forever.

Walt Disney Co. (NYSE: DIS) has raised the prices of most of its streaming packages. For example, what the company calls “Duo Premium,” a bundle of Disney+ and Hulu without advertising, has risen to $19.99. The similar Netflix Inc. (NASDAQ: NFLX) product is $15.49. It is unlikely that anyone outside of Disney and analysts who track the industry knows whether people make comparison shopping among streaming services based on price. Suffice it to say there is a point at which services will be considered too expensive.

Survey firm Antenna reports that monthly churn across the industry is 5.5% for “premium streaming services.” The sector is most threatened by “serial churners” who have canceled more than three services in the past two years. Antenna says they make up 23% of users but 40% of canceled subscriptions.

Churn is particularly difficult on streaming revenue because each person who leaves has to be replaced. Until that happens, a streaming service cannot grow by adding additional subscribers. This challenge threatens streaming companies at both the top and bottom lines. Disney’s stock continues to struggle.

After billions of dollars of losses, Disney’s streaming business finally made a tiny amount of money last quarter. Unless those profits surge at an unimaginable rate, Disney may not get its investment back for a decade. For that improvement to occur, Disney has to have among the best churn figures in the industry and the ability to increase prices simultaneously. That’s a high hurdle.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.