Disney Sees Promising Financial Profit After MULAN Streaming Release
By Cooper Dowd, Staff Writer
Unlike Warner Bros. TENET, which saw a theatrical release both overseas and domestically, Disney gambled on a different strategy, releasing their live-action remake MULAN on their streaming service Disney+.
“Streaming has become such an important part of Disney’s (DIS) business,” Kelly O’Grady, dot.LA’s chief correspondent and an ex-Disney analyst told Yahoo Finance. “But Disney also has to ensure that this becomes a profitable segment for them and in order to do that, they need to rack up those subscribers quickly.”
O’Grady said that whether or not the movie is released in theaters or over the streaming service, it will be challenging to earn the desired profits in a market that is just beginning to test the waters.
“This is one of those films where it’s going to be very hard to reach that [coveted] $1 billion mark—whether it’s in theaters or over Disney+,” O’Grady said in reference to the pandemic. “But it does give [Disney] an opportunity to test this out and say, ‘Hey, are people willing to pay?'”
According to 7Park Data, almost 30% of U.S. households purchased MULAN at the $30 price point. The movie received more views than other Disney+ titles that were free.
Assuming that U.S. households make up 50% of that total base (Disney has not yet broken out the exact number of U.S-based subscribers), 7Park’s data suggests that roughly 9 million users purchased the “Mulan” film for $30 a pop (29% of our estimated 30 million users.)
Under that scenario, net profits would pile up to $261 million for U.S. markets alone—and that’s on the conservative side.
“We are very pleased with what we saw,” Chief Financial Officer Christine McCarthy said, who spoke via online video to the Citi 2020 Global Technology Conference.
Regardless of the actual numbers, MULAN is making a considerable amount of money from their strategy, as they are receiving 100% of profits while a theatrical release would mean split profits.
“A dollar spent on Disney+ is way more valuable to [Disney] than a dollar spent at the theater,” O’Grady noted. “In the theater, AMC might take about 40%-50% of a film’s box office over its lifetime… But Disney is going to take 100% if you buy it directly on DisneyPlus.com.”
“If so, this is something [Disney] could start to do more of in the future, which would give them more data, and also provide a way to still monetize these franchises in a world where a pandemic happens again,” O’Grady added.
However, with TENET and MULAN acting as the “guinea pigs” for the success of Hollywood tentpole releases in a struggling domestic market, it is inevitable that analysts will draw a comparison between the two studios’ strategies.
But John Reed, co-producer of MULAN, claims that the comparison between the two releases’ levels of success is not straightforward.
“I think one of the difficulties going forward is going to be how we set the metrics for success,” Reed told YahooFinance. “I’m used to: Monday morning, you open the trades, $100 million opening, and everybody knows you won… We’re not going to have that. We’re not going to know how many new subscribers there were, we’re not going to know how many views there were. And there’s a lot of differing metrics inside the streaming universe: full views, partial views, multiple views, all of those kinds of things, which we haven’t standardized as an industry yet.”
Reed recognizes the novelty of releasing MULAN on streaming services before ever reaching the U.S. theaters, but he sees it as a learning opportunity.
“I grew up doing big theatrical releases, so for me it’s a little weird, the way that you weight your marketing campaign and the way that you rely on social media is very different from how you’d release ‘Armageddon’ or movies like that. It’s a very different approach. It’s been a great education,” Reed said.
Movieguide® previously reported on TENET’s domestic debut, and although it turned out a lackluster performance, the Hollywood blockbuster’s overseas success contrasts MULAN, whose global release flopped:
After a compelling international opening weekend where TENET made a surprising $53 million, the domestic opening weekend turned in a noticeably smaller revenue of $20 million. Although this is the best opening for a movie during the pandemic, there is still a concern for the success of other anticipated releases such as the Warner Bros. movie WONDER WOMAN 1984. Without the full involvement of major markets such as New York City and Los Angeles, there could be continued release delays.
As analysts assess the success of the two prominent strategies attempted by Warner Bros. and Disney, audiences should expect the major studios to eye release dates further out for future movies like Disney’s BLACK WIDOW and WONDER WOMAN 1984.
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