Disney's Latest ESPN+ Price Increase: What Smart Investors Need to Know
Walt Disney (NYSE: DIS), if you hadn't already heard, is upping the prices for its ESPN+ streaming service. Although the cost of the bundle that includes Hulu, Disney+, and ESPN+ won't change (for now), the monthly cost of ESPN+ alone will move from $6.99 to $9.99 as of Aug. 23, while a full-year subscription will swell from $69.99 to $99.99. It's the biggest single price increase the company has imposed for ESPN+, and management is justifying it as necessary to help cover the costs of the live sports coverage that has been added to the platform of late. These additions include PGA events, professional tennis, hockey, and perhaps most notably, select NFL games including Monday Night Football.
It still won't be as robust as the programming offered by cable's ESPN, to be clear. It could get there sooner than later, though, given that ESPN+ will now generate more revenue per user than conventional cable will. Although the estimates vary from one source to another, ESPN generates on the order of $7 to $8 per cable viewer per month for Disney.
The idea that the streaming service could overtake the cable channel was unthinkable as recently as just a few years ago. Back then, Disney needed cable systems to carry ESPN as much as cable providers needed ESPN to prevent customers from cutting the cord. Now though, the entertainment giant continues to ease away from these once-vital partnerships, inching ever-closer to a standalone streaming version of the popular sports channel. The recently announced price increase for ESPN+ is another step toward that end, and perhaps one of the biggest steps yet.
Source Fool.com
