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Disney is raising prices, but this time, don’t blame inflation

Another big American company is raising prices again, but this time, don’t blame inflation.

Disney To be raise prices on its streaming products and signaled that the works at its theme parks could also increase in price. On Wednesday, the company said the price of Disney+ without ads will increase by $3 per month to $10.99 starting December 8. Hulu with ads will increase by $1 per month to $7. $.99 and Hulu with no ads will increase $2 per month to $14.99.

Then on Thursday, Disney CEO Bob Chapek indicated to CNBC’s Julia Boorstin that price increases are likely to happen at theme parks as long as people keep coming.

“We read the demand. Right now we don’t have a plan for what we’re going to do, but we do scalpel surgery here,” Chapek said. “It’s all up to the consumer. If consumer demand continues to grow, we’ll act accordingly. If we see a decline that we didn’t think we’d see, then we do. I can act accordingly.”

Instead of blaming rising costs of materials, labor, and gas, Disney is rationalizing the increase based on consistency in the popularity of its products. Disney said Fourth, Disney+ added 15 million new subscribers last quarter, blow away expectations. It also said it expects further growth for core Disney+ (excluding India’s Disney+ Hotstar) next quarter in addition to the 6 million it added in its third fiscal quarter.

Rising prices due to strong demand is nothing new for Disney. Theme park ticket prices have been escalating for decades. In its most recent quarter, the company posted a 70% increase in revenue in its parks, experiences, and products division, to nearly $7.4 billion. Per capita spending at national parks increased by 10% and increased by more than 40% compared to the 2019 financial year.

Handout | Getty Images Entertainment | beautiful pictures

Disney has a strategy of limiting attendance at its parks, an effort born of efforts to avoid crowding in Covid pandemic. This move is one way to improve the customer experience. Additionally, the company has added Genie+ and Lightning Lane products, which help manage the guest experience and allow parkers to skip routes to get to key attractions.

In addition to the parks, every year Disney asks cable providers to raise prices aggressively for ESPN because they know there’s strong demand for steady stream of live sports rights.

Disney+ first launched in November 2019 for $6.99 per month. About three years later, the price of the product without ads will increase by 57%. The service currently has more than 152 million customers.

Chapek experienced his share of road crashes since taking over as Disney CEO to Bob Iger. But one thing hasn’t changed: consumers still seem to enjoy what Disney has to offer.

WATCH: CNBC’s Full Interview With Disney CEO Bob Chapek

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