In what may break the hearts of many, Disney (NYSE:DIS) announced price hikes for its streaming services and its Disneyland family passes. In the words of senior internet and media analyst at Needham, Laura Martin, “The cost of magic is going to be out of reach for many families.”
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Disney clarified that the hiked prices are a reaction to direct-to-consumer profitability challenges and falling subscriber numbers. Indeed, its streaming service arm has seen consecutive quarterly declines this year.
The recent price hike is the second this year, and the effect is spread across most of its streaming platforms. The monthly price of the Disney+ ad-free plan jumped to $13.99 a month in the U.S. from the previous $10.99. Similarly, Hulu’s ad-free plan saw a $3 increase and now sits at $17.99 monthly.
The price hike will also affect the costs of Hulu live TV packages, with prices for the ad-free plan and ad-supported services jumping by $7. Sports fans are equally affected as ESPN+ will increase by $1 to $10.99 monthly.
Meanwhile, Disneyland price hikes may make it difficult for families to plan their next visits. According to Martin, “the average cost to take a family of four to Disneyland for a week is $6,500, which, round numbers, is about 10% of the average household income in America.”
The peak one-day pass jumped by $15 to $194 per day, while the annual price increased by $50 to $1,449 per year. Kids weren’t spared either, with the daily average price for four people aged 10 and above now at $776. Parking fees will also rise by $5, to $35 for ordinary parking and $55 for preferred parking.
Is Disney a Good Long-Term Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on DIS stock based on 17 Buys, five Holds, and two Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average DIS price target of $106.50 per share implies a 26.23% upside potential.
