Disney's Full Return to Movie Theaters Will Meet New, Lasting Challenges

Less than a year before the pandemic, Walt Disney Co.'s movie wing was flying high. Avengers: Endgame was the highest-grossing film of all time, and there were plenty more Marvel movies coming, along with sure moneymakers from Pixar and Star Wars, plus with the Fox acquisition complete, Disney exhibited an overwhelming command of the U.S. box office

Of course, a lot's changed since. And while the success of streaming service Disney+ has played an enormous role in keeping the conglomerate afloat over the last 12 months, Disney still derives a large portion of its value from theatrical releases. And not just any releases, either. Disney's long perfected the "event" cinematic release that is made to feel big. It's a cultural moment, a last vestige of water cooler moments in America, and one of the biggest intangibles of the company's money-printing machine.

As of this writing, Disney either distributed or now owns 14 of the top 20 highest-grossing movies of all-time, per Box Office Mojo's lifetime gross data. At its most basic level, Disney makes popular movies. This we know. But the "event" aspects and spectacle of it all is what's turned billion-dollar box office hauls into the norm for Marvel films, and how even an animated sequel with lukewarm reviews like Frozen II was able to take home nearly $1.5 billion.

We mention all of this because there's no guarantee that environment exists anymore when Disney returns to theaters in full later this year.

Earlier this week, Disney announced that Emma Stone's Cruella (based on the villain from the 101 Dalmatians animated film) and Black Widow would be released in theaters... and on Disney+ as "Premier Access" titles that subscribers could pay an extra $30 to watch before they eventually wind up included with the rest of the service's library down the road

For Cruella, this fate doesn't alter much. It's coming out on the planned date, and maybe it was always more of a niche fandom offering anyway -- unless Stone's work as the titular character was such that it drew in a larger audience.

But for Black Widow, this creates a larger conversation entirely about the Marvel side of the house for Disney, and that aforementioned "event" release approach.

Originally planned for a theatrical release in May 2020, Black Widow was pushed to November and then May 2021 as Disney kept reshuffling the deck chairs for its most profitable movie franchise, the Marvel Cinematic Universe. The MCU hasn't seen a theatrical release since July 2019, when Sony-owned Spider-Man: Far From Home debuted, and hasn't distributed an MCU film since the record-setting Avengers: Endgame in April 2019. And now it won't see its next one until Black Widow finally hits theaters in July 2021.

Making even more complicated for Marvel is both its signature interconnectedness (pushing one movie pushes them all) AND the MCU's expansion into TV on Disney+. Now, they're not just worrying about the storylines within the movies and how they play into one another, but the storylines within the shows as well, and making sure everything stays on track.

On top of that, the bigger question for Marvel (and Disney overall) is can they expect the same pomp and circumstance they're used to when Black Widow hits theaters given the delay and -- more pressingly -- ability to stream it on the day of release? The TV entries into the MCU have found a way to master a serialized approach to owning the zeitgeist for weeks on end. But a movie rental is a one-shot deal. The diehards probably go to theaters opening weekend. Beyond that, they're watching when they get around to it on streaming -- either by paying $30 in the first few months, or just waiting for it to be "free" (with an existing sub) by the fall.

Warner has already reset the math for good on theatrical releases by opting to stream its 2021 slate on HBO Max. They won't be doing so going forward, but that doesn't much matter when it comes to going back to way things used to be. They simply can't.

Disney CEO Bob Chapek's acknowledged as much himself, and most major studios are now approaching films with a shortened theatrical window -- so a much quicker path to streaming will be the future of movies.

Without getting into the long-term damage that probably does to accessibility for theatrical releases (studios aren't going to bother with the promotion cycles around something that isn't a guaranteed money-maker and/or tied to existing IP), it creates even bigger questions around the "event" of a release to begin with.

Marvel -- and specifically, the Avengers films -- already changed the math so something close to a billion dollars was something to strive for at the box office every time. Falling short of it was already curtailing releases in recent years. And now that'll be fully realized. A streaming release doesn't need an "event" -- real or perceived -- necessarily. So there's dollars saved for studios that hemorrhaged cash last year.

Streaming releases also put more money back into studio pockets, since they're being paid directly at this point for PVOD access -- versus splitting ticket prices with theaters.

You can see how the math on this has always been more skewed toward promotion and lining theaters' pockets, versus the actual studio. Streaming services changes all of that, and potentially makes the long-term goal quantity over quality (see the Netflix model of a persistent flow of NEW and MORE over lasting impact anymore).

When looking at Warner's films that headed to or will head to HBO Max this year, there's only a handful that truly miss out on an "event" by heading straight to streaming -- or even splitting the opening weekend with a theatrical release. So this shift may not necessarily harm Warner in the long run because they can still do "event" releases a handful of times per year, as they did before. The rest can be volume-based, and they're going to potentially collect a larger profit on those by encouraging repeatable monthly subscription fees over one-time box office purchases.

But for Disney... what do you do when your the crux of your company's hype vehicle is vastly shortened, and potentially threatened altogether by a world where people would rather just stream your new (big) release from the comfort of their own home?

Even if you are getting more money from the $30 rental and recurring Disney+ sub revenue than you are with a $13-20 ticket per moviegoer, does the collection of super-users and people willing to watch everything you're putting out decline because it doesn't feel like a special experience anymore?

As we come out of this pandemic slowly but surely, we still don't really know what its long-term effects will be on the human psyche and re-established regular behaviors. Some of the things we've practiced for the last 12 months will fall by the wayside in due time. Others, maybe not so much. But Disney, perhaps even more so than its various competitors, is certainly anxious to find out what happens and whether the feelings it was profiting off of for decades can return to what they once were.