Entertainment behemoth the Walt Disney Co. has clearly felt the pain of the pandemic given its various travel, live sports and movie-related holdings. And with no end in sight to theater closures in the United States, it was only a matter of time before Disney made a move to address its backlog of scuttled films for 2020.
As part of its Tuesday earnings announcement, Disney shared that the live-action Mulan remake would be headed to Disney+ on September 4, while also getting a theater release in some international (non-U.S./Canada) markets like China, where theaters are currently open. That Mulan will be streaming isn’t the big news, though. Instead, it’s the fact that the movie will feature a premium price tag of $29.99 to rent.
Disney isn’t the first studio to go this route. Universal’s “Trolls World Tour” set digital records with nearly $100 million in revenue on a $20 rental earlier this year, and plenty of others have followed suit with similar releases at that price point.
During the announcement, Disney CEO Bob Chapek said that the approach would not be the new model, but instead be a “one-off.” However, he’s sort of obligated to say as much right now. How Mulan fares in early September seems likely to determine a lot about the remaining Disney films for the year — including the latest Marvel release, Black Widow. That title was originally set for May, before Disney delayed its entire slate. The new date is currently set at November 6, but the way coronavirus cases continue to grow in the U.S., it seems unlikely that the movie will be able to open in theaters as currently planned.
So as a supposed “one-off,” Mulan serves as a trial balloon for Disney to see if they can really charge $29.99 for a rental and get away with it. Not only is that $10 more than most rentals right now, but it also requires signing up for Disney+ at $6.99 per month on top of that. For every Mulan rental from a new streaming subscriber, Disney’s getting a minimum of $36.98, which is nearly on par with the cost of three movie tickets to see it in theaters. Even without a new Disney+ subscription, it’s the cost of two tickets.
Even if Mulan — a title without a franchise tie-in beyond the original, animated movie — has just modest returns from rentals, this model seems like a no-brainer for Disney to endorse both for as long as COVID-19 limits film releases, and in the future too. Of course, there should probably be some caveats, to focus on the recurring income instead.
While someone paying $6.99 for Disney+ already could conceivably fork over another $29.99 for one movie, Disney could really be trying out a “box office” model here that potentially charges a monthly rate of $15-20 for rental access to all of its latest studio releases. In that case, consumers are getting at least one rental per month — still for less than the cost of two tickets . For Disney, that’s still a win because it’s recurring income and they’re getting more from audiences than they would in theaters given declining trips to the theater for Americans (and the fact that right now, people aren’t necessarily anxious to go to a movie anytime soon anyway).
To some extent, Black Widow, which is tied to the billion-dollar Marvel Cinematic Universe, could be the better test for THAT model, if Disney wants to go that route when the movie is due for release in November. Marvel’s fan base would certainly need a lot less convincing when it comes to paying any premium on a movie release, but you also have to wonder if those consumers are already signed up for Disney+ given the glut of Marvel content on the platform already. You’d still get them to pay the “box office” premium, yes. You just aren’t adding a new subscription to Disney’s coffers.
This has been a year of seismic change for the movie industry, and it’s doubtful those shifts are done just yet, either. Disney’s look at the premium model here with Mulan may not want to tie itself to the model long-term. It’s just likely that once the company sees how much money it can make tiering out Disney+ for premium subscribers/releases, it can’t and won’t necessarily want to go back.