Walt Disney Co. Chief Executive Bob Iger acknowledges his company goofed on some of its pricing strategies.
Speaking at the Morgan Stanley Technology, Media and Telecom Conference on Thursday, Iger admitted that Disney’s pursuit of higher profits at its sprawling theme parks — and its initial bargain-basement subscription fee for streaming service Disney+ — had negative consequences for the Burbank entertainment giant.
In particular, price hikes at Disney’s parks backfired because it made a day at Disneyland and Walt Disney World in Florida a less happy experience for visitors, including some of its most cherished fans. The company has backed off on some of the pricing initiatives that offended visitors.
“In our zeal to grow profits, we may have been a little bit too aggressive about some of our pricing,” Iger said. “I think there’s a way to continue to grow that business, but be smarter about how we price so that we maintain that brand value of accessibility.”
On Thursday, Iger — who returned to lead Disney as CEO last November after his hand-picked successor Bob Chapek was ousted — pledged to “to continue to listen to consumers [and] we’re going to continue to adjust.” Since Iger returned, Disney has scaled back some of its price enhancements at the parks, reorganized the company and announced a plan to find $5.5 billion in cost savings, which will include the elimination of 7,000 jobs.
The company is taking a hard look at whether it should hold onto its general entertainment service, Hulu and even its sports empire, ESPN. Rising sports-rights fees and dwindling cable TV subscriptions have made ESPN less profitable. Iger has previously said “everything is on the table” with regard to Hulu.
He has also said there are no conversations about selling or spinning off ESPN. On Thursday, he said the company has an “open mind” about ESPN’s future, but remains bullish.
Park strategies, in particular, have come under the microscope.
“One of the things that we had to do was we had to improve the guest experience by reducing crowding,” Iger said. “It’s tempting to let more and more people in, but if the guest satisfaction levels are going down because of crowding then that doesn’t work. We have to figure out how we reduce crowding but maintain our profitability. And we did that well.”
On the flip side, Disney went to market with Disney+ in November 2019 with a $6.99-a-month subscription fee but the service has lost billions of dollars for the company. Now, the company charges $10.99 a month for an ad-free version of the service.
“One of the key things that we have to figure out is a pricing strategy that makes sense,” Iger said. “In our zeal to grow global subs[cribers], I think we were off in terms of that pricing strategy. And we’re now starting to learn more about it, and to adjust accordingly.”
This is a developing story.
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