(CTN News) – It has been revealed that Disney will be raising the prices of its streaming service by more than a quarter in order to increase its profitability under its new chief executive, Bob Iger.
With effect from October, the US entertainment giant will increase the monthly cost of Disney+ to $13.99 per month, an increase of 27 percent compared with the previous price.
There is also a plan by Disney to roll out its ad-supported subscription tier internationally at a price of £4.99, starting in the UK.
As a result of this, the streaming service is continuing to lose paying subscribers at a rapid rate.
In the three months leading up to July, Disney+ lost another 11.1m subscribers, bringing the total number of subscribers for the service to 146.7m.
In February, Disney+ announced that its subscribers had dropped for the first time in the past year, and since then it has continued losing viewers.
Although the streaming service recorded a loss of $512 million (£402 million), it was less than half that recorded during the same period last year, when it posted more than $1 billion in losses.
Disney has been able to narrow its losses as Mr Iger embarks on sweeping cuts to its spending, including plans for 7,000 workers to be laid off.
In order to turn the streaming business into a profitable venture,
Disney is investing billions of dollars to make the venture a success.
A recent report by indicated that the company spent $2.44 billion removing shows and movies from its online services and terminating its contracts with outside producers for the purpose of reducing costs.
According to Mr. Iger, Disney’s cost-saving measures are expected to result in savings in excess of its initial goal of $5.5 billion.
Earlier this year, Mr. Iger returned after an 11-month absence after shareholders became dissatisfied with the performance of the company under his successor, Bob Chapek.
Additionally, he is considering the future of the company’s linear TV division, which reported a 23 percent decline in profits during the third quarter.
By implying its ABC, Disney Channel and FX channels are “not core” to its future, Mr Iger appeared to hang a for sale sign over the company.
The share price of Disney has declined since he was reinstated at the helm of the company. The latest Pixar animated film, Elemental, received lukewarm critical reviews and had a weak opening weekend box office performance, suggesting that the company’s once-promising hit factory is not as successful as it once was.
Despite bringing in just $30 million on its first weekend, Elemental has since taken in $400 million.
Disney+ is also affected by the ongoing Hollywood writers’ and actors’ strikes, which may delay the release of future box office hits and shows.