Should Disney Release Mulan on Disney+ Right Now?
Over the past few days, the entire film industry has undergone a cataclysmic change. And decisions that other studios have made suddenly impact The Walt Disney Company. Everyone’s favorite movie studio could do something unprecedented. Should they, though? Let’s talk about whether Disney should release some of its potential 2020 movies on digital instead.
Explaining the Theatrical window
For the body of 40 years, the Motion Picture Association of America (MPAA) has stridently enforced a part of the theatrical distribution system. It’s called the theatrical window, and you know what it is even if you don’t recognize the term.
Most major Hollywood productions receive a theatrical release. Then, these movies enter second-run theaters, which people call dollar movies even though they haven’t cost a dollar for a while. Afterward, studios make the same films available on home video.
The theatrical window has shrunk in recent years as the digital sales market has exploded. Roughly three months after a movie is available at places like Regal or AMC Theatres, it’s for sale on Amazon, Vudu, and FandangoNow. Physical media sales like Blu-Rays are also part of this window.
I say three months as a general time estimate. However, some films become available in the digital marketplace in as little as eight weeks. Generally, these titles have underperformed at the box office. So, the studio uses digital sales to earn more revenue.
Historically, a different window has claimed the fourth window. It’s the time when a film is available on pay television services like HBO and Cinemax. Other windows exist as well. They’re the cable television and network television showings.
The reason why many movies are so profitable is this series of windows. First, a title earns box office, and then it receives digital/physical sales revenue. Next, cable and television networks license the rights to the films. Since 2007, studios have even had another way of making bank…
The Streaming Media Era
In 2007, Netflix fundamentally altered the nature of movie consumption. The DVD-by-mail service pivoted to streaming media. The company paid studios for the same rights that HBO, cable channels, and networks had wanted. The difference was that Netflix empowered broadband internet owners to watch whatever they wanted whenever they wanted.
Since the advent of Netflix’s over-the-top streaming service, I’ve steadfastly supported the idea of a smaller theatrical window, which has gotten me yelled at by any number of studio executives. The MPAA’s top executives know that if/when the theatrical window collapses, movie chains may never recover.
After all, think about where you’ve watched most movies. The answer is the television unless you’re under the age of 25. In that case, it’s a smartphone or tablet. Even the most passionate film lovers – and I’m definitely one of them – only visit the theater once or twice a week. Meanwhile, something’s always available on Netflix, right?
Disney knows this better than anybody. The company accidentally aided the ascension of Netflix. An obscure aspect of a licensing agreement between Starz and Netflix gave the streaming service the ability to air many Disney titles before they became available on pay channels. It disrupted the industry.
This turn of events explains why Disney has invested so much money in its own streaming service. Former CEO Robert Iger wholeheartedly believes that his company’s future hinges on the success of Disney+. And that brings us to the question at hand.
Should Disney Sacrifice Now for the Future?
Frozen 2 is currently available on Disney+. It’s not supposed to be yet, but the company’s executives wanted to turn a negative into a positive. So, they made the film available three months ahead of schedule. This unexpected decision cost Disney a reasonably significant amount of DVD/digital sales. And it was the right call.
As I type this, the citizens of the United States are stuck indoors due to the Coronavirus. With nothing going on, we’re happily watching the return of Anna and Elsa as we re-visit Arendelle. It’s a lovely distraction from the fact that we shouldn’t go outside right now.
We aren’t the first people in this situation, either. Disney officials knew this was a possibility, as Chinese theaters closed last month. This impacted the potential release of Mulan, a film the company made in anticipation of hefty Chinese box office revenue.
Because of COVID-19, Chinese officials closed theaters throughout the country. This week, the same thing has happened in the United States. The top theater chains have all closed for weeks, if not months.
This turn of events explains the delays of four impending Disney releases. The studio recognized the impending box office doom and delayed Mulan, Antlers, The New Mutants, and Black Widow. The company’s goal is to find another opportunity to release these titles in theaters. However, that’s no longer the only option.
The Universal Change
Everyone saw what happened to Onward, the delightful Pixar movie that will go down as the company’s least successful film ever. Onward didn’t do anything wrong. People simply didn’t want to brave the theaters in the current climate.
Not coincidentally, this past weekend’s box office was the worst one since of the 21st century. Even a PIXAR movie couldn’t persuade film lovers to leave their homes.
Universal Studios had scheduled another animated movie for release on April 10th. Trolls World Tour is the sequel to Trolls, which earned almost $350 million in 2016. So, it’s an in-demand product that should have done well at the box office. Despite this fact, Universal evaluated the landscape and did something bold.
Trolls World Tour will release day-and-date on digital. Now that theaters are closed, it’s really just a straight-to-digital video (STV) release. This sequel is the most significant STV title ever. It’s not the only one, though.
Blumhouse Productions, a partner of Universal, has asked that two of its titles break the theatrical window as well. The Invisible Man, a February 28th release, and The Hunt, which came out last weekend, will debut on digital this Friday.
In other words, you can watch these titles in the comfort of your own home, something that wouldn’t have been possible two weeks ago. Similarly, Harley Quinn: Birds of Prey, a box office disappointment, will release on digital next Tuesday, months ahead of schedule. After holding steady for more than a century, the theatrical window just collapsed.
What Should Disney Do?
Disney currently has four movies sitting on the shelf. Among them, Black Widow and Mulan seemed destined for $1 billion in box office at the start of the year. The New Mutants’ status is more complicated, while Antlers never looked like a box office success.
Should Disney use this remarkable set of events to release one or more of those titles on digital? Or maybe even Disney+/Hulu? Right now, almost all corporations are taking a financial drubbing. Disney’s impacted more than most.
However, one unit of the corporation will benefit from people trapped in their houses. All forms of home media consumption will rise due to Coronavirus. People can’t go outside, leaving them to watch more movies at home. Disney+ and Hulu subscription totals should increase during this unique time in our society.
A film like Antlers wouldn’t move the needle much, but it’s something that Disney could trumpet as a coup for one of its digital services. The New Mutants offers even more potential benefits. Everyone loves the X-Men, which explains why the franchise’s films have totaled more than $6 billion in global box office.
Disney officials had previously considered releasing The New Mutants on Hulu anyway. Making this move today could drive sales on the lucrative service, which Disney has stated earns much of its profits thanks to advertising revenue.
An exclusive X-Men movie should prove quite popular. If I were at Disney, I would absolutely make this move. I think that the horror aspects of The New Mutants make it too dark for Disney+, though. So, that leaves Hulu as the optimal choice.
Would Disney Release Mulan Or Black Widow First on Digital?
I believe that the answer to this header’s question is no. I’m nowhere near as confident as I would have been a week ago, though. To my mind, Disney couldn’t earn enough in the short term from Disney+ subscriptions to justify the box office revenue loss.
On the other hand, this decision shares similarities with something that the company has previously done. Disney willingly ceded licensing revenue from Netflix to take back some of its movies. Iger did this because he saw the long-term potential of Disney+ as mattering more than anything else.
This same logic applies to Mulan and/or Black Widow. Disney could feasibly pick one of these titles as a loss leader, giving up all box office revenue right now. In return, the company could market Disney+ as having an exclusive A-list movie available on the service.
Let’s say that five million people signed up for the service because Mulan was available. According to Disney comments about profitability, the company earns $5.56 per subscription on average. Since Disney+ costs only $6.99 a month, you can tell how profitable it is for Disney.
At that rate, all five million people would need to stay on the service for one year for the deal to make sense for Disney. Such a scenario would mean about $334 million in profit, which is in the ballpark for what the studio would actually net from $1 billion in box office.
I don’t think that Mulan would drive that many new subscriptions. Only Disney knows for sure, though. While I don’t expect it to happen, I’ll say this.
You shouldn’t be surprised if Disney suddenly announces that one of its four delayed projects will debut on Disney+/Hulu. And I think it would be incredibly daring of Disney to have Mulan skip the North American theatrical window altogether.
A straight-to-streaming release would qualify as a swing-for-the-fences move that’s even more dramatic than releasing Frozen 2 on Disney+ three months early. And this choice WOULD gain a lot of positive attention for Disney+.