Walt Disney (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 (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 last 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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