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Despite Moving ‘Mulan’ to Disney+, the Mouse Can’t Afford to Make VOD Its Future — Yet

Disney is making lemonade with the brutal state of affairs in the state of domestic film releasing.




When Disney announced Tuesday that it was ditching the hope of releasing “Mulan” in US theaters, in favor of a domestic Disney+ premiere September 4, it could have been construed as yet another pandemic-era stake in the heart of the theatrical experience. But in reality, despite the fact that Disney won’t have to split its “Mulan” PVOD revenue with any third party, viewers shouldn’t expect to watch the next Marvel release at home. The move is a safe bet to make up lost theatrical grosses while boosting Disney+ subscriptions — a strategy that, for now, simply can’t be applied across the company’s slate.

The film will be available only to people paying $6.99 a month for Disney’s streaming service, but they’ll also have to pony up an additional $29.99 to actually watch the movie. Unlike the recent PVOD trailblazer Universal, Disney’s model of “premiere access” sees the studio taking in 100 percent of the revenue. Universal splits it 80-20 with iTunes and other rental platforms. Theatrical revenue is split about 50-50.

For Universal, those economics were so favorable that in April, following the release of “Trolls World Tour,” the studio revealed it would begin releasing some films direct to PVOD, inflaming AMC Theatres, which banned the studio’s films before a detente that will allow a shortened theatrical window.

But even among the majors, nobody can come close to Disney’s parade of billion-dollar films (seven last year) — Disney simply doesn’t release “Trolls”-level films in theaters — films of that caliber, like “Artemis Fowl” head straight to Disney+ free with subscription.

For Universal, the “Trolls” PVOD math looked like this: Universal has made more than $77 million in revenue from “Trolls World Tour” based on its $100 million in digital sales. The original “Trolls” grossed just under $154 million at the domestic box office, which translated into the same profit for Universal.

By comparison, Disney’s last live-action adaptation, 2019’s “Aladdin,” grossed $1.05 billion. The studio would need around 30 million people to rent “Mulan” in order to match their “Aladdin” profits, when you account for budget and marketing costs.

Crucially, Disney isn’t leaning exclusively on Disney+ to make “Mulan” a moneymaker. That has as much to do with Disney+’s importance to the company as it does with theaters’ importance.

The film will get a theatrical release in places like China and other territories where the company has not “announced launch plans for Disney+ and where theaters are open,” CEO Bob Chapek said.

“We see this as an opportunity to bring this incredible film to a broad audience currently unable to go to movie theaters, while also further enhancing the value and attractiveness of a Disney+ subscription with this great content,” he said.

The company is betting that excitement over the film in China will be enough to offer healthy box-office returns in that country, and they’re making lemonade with the brutal state of affairs with the state of domestic film releasing.

While Chapek termed the “Mulan” hybrid strategy a one-off, he very clearly left open the door for more non-traditional release strategies, especially during the pandemic. As he has frequently stated, Disney+ and Hulu are the keys to the company’s long-term growth strategy, but at this point, those businesses are losing money. While the promise of theatrical grosses getting anywhere close to pre-pandemic levels is shaky at best, Disney needs to keep its investors happy with a healthy balance sheet, especially now that the closure of its parks, sliding TV ad revenue, and shuttered theaters meant a $4.7 billion loss in Q3.

“Mulan is a one-off,” Chapek said. “That said, we find it very interesting to be able to take a new offering, our premiere access offering, to consumers at a $29.99 price, and learn from it and see what happens.”

He added: “All I’ll say about our research is that it shows that such an offering … not only gets us revenue from the original transaction from the PVOD, but also acts as a fairly large stimulus to sign up for Disney+”

And less than a year after its launch, Disney+ is on a roll. It’s reached 60.5 million worldwide subscribers, putting it in the number three spot, after Netflix and Amazon. That puts Disney at the threshold of its 60 million to 90 million subscribers it told investors its would get to by 2024.

The “Mulan” play, coupled with Disney+ launches in the Nordics, Belgium, Luxembourg, Portugal, and Latin America this fall, could give the service an even bigger boost that will be sure to convince investors the company is on the right track of realizing its long-term direct-to-consumer strategy, despite otherwise horrible pandemic-related financial reports.

Additionally, Chapek’s announced that Hulu’s long-awaited international launch plan won’t actually be Hulu. Instead, Disney will offer content from FX, ABC, and other Hulu-hosted networks internationally on a sister service called Star.

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