Walt Disney Co. has announced a bold move that has stirred mixed reactions in the digital entertainment realm. The entertainment behemoth is tightening its belt by initiating a charge for the shared use of passwords on its flagship streaming service.
Effective immediately, users of the Disney+ streaming platform will have to fork out an extra $6.99 per month to include an “extra member” on its advertising-backed tier. Meanwhile, to add a person to the ad-free plan, a steeper $9.99 monthly fee is to be paid.
Disney has clarified that this additional cost will permit subscribers to extend their subscription privileges to a friend or family member beyond their immediate household. However, it’s important to note that this option is exclusively valid for Disney+ and does not encompass the other streaming services under the Disney umbrella such as Hulu and ESPN+.
The Shift Towards Profitability in Streaming
This strategic maneuver aligns with Disney’s overarching goal of rendering its streaming platforms financially self-sustainable. Notably, Disney’s streaming division, comprising Disney+, Hulu, and ESPN+, experienced a milestone moment in the last fiscal quarter reported in August.
The trio of streaming services collectively generated a profit of $47 million during that period—a stark improvement from the previous year’s $512 million loss. As Disney grapples with declining viewership and advertising revenues in its conventional TV business encompassing the ABC network, enhancing the profitability of its streaming arm has become a top priority for the company.
The urgency to make streaming profitable was aggravated at Disney following a costly stalemate last year involving Hollywood thespians and scribes. Amid these challenges, Disney+ witnessed a 1% uptick in subscriptions, reaching 118.3 million during the last fiscal quarter. Following suit, other streaming giants like Netflix have also cracked down on password sharing and introduced additional charges for shared accounts.
Analyst Perspective on DIS Stock
Investor sentiment remains optimistic towards Walt Disney’s stock, with a consensus rating of Strong Buy from 22 Wall Street analysts. Of note, this sentiment is substantiated by 18 Buy ratings and four Hold recommendations issued within the preceding three months. Notably, there are currently no Sell ratings on the stock.
The average price target for DIS stock stands at $117.65, implying a potential upside of 22.46% from the current levels—an encouraging prospect for existing and prospective investors considering a position in the company.
For more insights on analyst ratings pertaining to DIS stock, feel free to delve deeper into the reports.