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I had thought the big game-changing news would be when AMC Theatres and Universal Pictures announced a partnership where they were shortening the theatrical window to 17 days. This was massive since forever and a day the window that existed before a movie could move from a theatrical release to a video rental release has been around 90 days. It was a significant change, but something that needed to happen thanks to Covid-19 making movie theatres as realistic as pink pandas riding rainbow unicorns. Even when we discussed this news on The Movie Breakdown, I was hesitant on if the 17-day window would become a reality considering we had not heard from other major movie chains yet like Cineplex Entertainment, Cinemark Theatres and Regal Cinemas. Not surprisingly a day after the podcast, Cinemark head made it clear that he did not approve and wouldn't play along with such a shortened window. Though I do think that the 90-day window is destined to be shortened permanently in the future and will at least have to be ignored during a pandemic that is eliminating large social gatherings and events.
What I knew would happen was more movies to be announced moving to streaming services or becoming major premium VOD titles for around a $19.99 price tag. What I did not expect and really shocked me was Disney announcing one of their major tentpole features Mulan would be going straight to Disney Plus on September 4th, but the twist being that it would only be available to their subscribers for a $29.99 fee. This would not be a traditional rental, as once the fee was paid, the Disney Plus subscriber would have the movie indefinitely as long as they kept the service, so rather it would be an unlocking of a specific movie rather than traditional rental. After 90 or so days (maybe less), it will then become available for all Disney Plus subscribers. Essentially, this would be just the theatrical release window period, and for certain markets that do not have Disney Plus, Mulan would still get a theatrical release.
One of the things that I find fascinating, is way back in April theatres threatened to boycott all future Universal releases (obviously, an empty threat because the chains had more to lose not screening future event pictures like Jurassic World|: Dominion and Fast and Furious 9) because the studio dared to release Trolls: World Tour on premium VOD thus kicking off a trend many studios are now adopting but I haven't heard any major push back towards juggernaut Disney doing something even more daring with an even bigger potential blockbuster in Mulan.
The hostility towards Trolls: World Tour going VOD instead of waiting for a theatrical release never made any sense to me. Even in April it was clear that it would be a long while before movie theatres would be able to have a significant audience for their screenings (if any at all, I expect a large portion of theatres will remain closed for most of 2020 and some forever), so it was rather foolish to think that Universal, who had already sunk a lot of advertising money into Trolls: World Tour for a April release, should wait until most theatres were open again.
The best alternative was seeing if people would be willing to rent a new release animated family movie at a $19.99 premium price. It turned out that during Covid-19 that families were very willing to pay that price and the movie turned out to be a major success. What didn't make sense to me is that this annoyed theatre chains, though some of that may have been hurt feelings that Universal was making it seem like they didn't need them to make a profit. But if movie theatre chains offered the movie in their video-on-demand store (I know for fact that Cineplex has one and they've been promoting it heavily during these times) then they'd still get a cut of that rental money. Of course, with it being at home then they are losing out on that sweet concession money, but that is when they do some special offer to entices people to Uber Eats some of their popcorn, snacks and pop.
They still had an opportunity to make money off VOD as long as they could convince customers to rent through their store and maybe they could still make a little off concession too, because I can't be the only person that occasionally craves some real movie theatre popcorn. Yet the odd thing is that it seemed to be at least a month after release before Trolls: World Tour was available to rent on Cineplex, so anyone who really wanted to see that movie likely did it from every other VOD option (iTunes, PPV, Microsoft Store, Prime Rental) before it became available at the theatres' store. Cineplex at least seemed to get over the direct to VOD issues by the time Scoob! was released the same way and I also know Judd Apatow's comedy The King of Staten Island was available on their store via premium VOD as well. They seem more open to this being way that they must make money for now and that studios don't have many other options.
Universal now looks like they were playing nice. Disney waved a much mightier middle finger to movie chains than any other studio has done. Maybe it is due Covid-19 keeping things shut down for months or Disney just being a giant you don't mess around with, but studios haven't retaliated or complained too loudly. In what is innovative and pretty genius if it works. Disney has created their own VOD service where there will be no middle-person and they can reap the majority of the profit from rentals.
Disney Plus currently boasts over 60 million subscribers and while there is probably a large portion of them that will wait for Mulan to come to the service for 'free', there are many who are starving for new movies to entertain their kids and will see the $29.99 doable. Even if only 10% bite at that price with Disney getting almost all the revenue, it has to be considered a win. I predict it will be a larger percentage. If you take a family of four to the movie theatre, after tickets and concessions you're likely looking at close to $100.00. If you have a decent home entertainment system and pop yourself some corn, then you can have a pretty decent move going experience with your family for much less than going to the theatre. My guess is Mulan is going to turn out to be a big hit and one that Disney gets to keep almost all the money.
Since this is a major tentpole that many people were anticipating and Disney has done a good job making it feel like a major event, they also have the potential of attracting new subscribers so that they can see a major movie on or close to the release date. It is the type of event film that may be enough to attract subscribers much like how Hamilton boosted their subscribers in the summer (but now with the benefit of increasing revenue too). Since one is unlocking the movie rather than renting, there is also a good chance the subscribers will stick around past a month if they really like the movie or they also could be lured in by many of the other shows and movies on the service.
Disney is currently claiming this is a one-time deal and not some new distribution model. I think the statement is more of a way to not further upset relationships with movie theatres too much but is a trial run to see if this is a feasible strategy during Covid-19. If Mulan turns out to be a massive hit on rentals and does increase subscriber numbers, then Disney must consider it as a potential way to distribute future event movies. Especially if the reopening of movie theatres continues to be very slow and most theatres are still closed by the end of the year or at a very limited capacity.
In November, there is a little movie called Black Widow scheduled while I am sure Disney's preference is to release that movie theatrically, but if things remain the same as now, my guess is they will try this distribution model with Black Widow if Mulan turns out to be a success. The higher price model works great for movies geared towards families, but I also think it will work for must-see movies like those set in the MCU. I can't see Disney being open to pushing Black Widow anymore because all of the MCU movies and series are interlocked, and you can't release stuff out of order since the one sets up the next. The MCU series that are set to be released on Disney Plus are delayed until they can release Black Widow, and for that reason, if theatres aren't at able to hold a large audience in November then I see Disney Plus doing the exact thing for Black Widow.
If Mulan and Black Widow turn out to be lucrative then don't be surprised when other studios attempt the same thing with their own streaming services. HBO Max becomes the exclusive place to stream Wonder Woman 1984 or the Peacock becomes the service to first see Fast and Furious 9. Right now, the thinking is theatrical is the best way to get a return on tentpoles, but if things don't clear up or Mulan makes more than it would have in theatres due to Disney keeping most of the revenue then it will be followed by other studios.
The other thing is that Disney Plus doesn't need to be the only place Mulan makes money. They could potentially throw a bone to other VOD distributors by offering a $49.99 tier for those that just don't or can't subscribe to Disney Plus. While that does seem steep, it again isn't a bad deal if you have a larger family that would have cost a fortune to take to the theatre. Plus, in a few months there could be traditional VOD, the Blu-ray release and premium cable release for those that want to watch Mulan but don't want to be a subscriber to Disney Plus. I know Netflix doesn't really do Blu-rays for their stuff, but Disney has proven to still be in that business even with their own streaming service, since they are well aware of the collectors' market that is out there.
Now, I am well aware that the best way to make lots of money and to feed the beast that is the big tentpole mega-event movies is still the theatrical model. For that reason, studios are still likely to want to partner and play nice with movie theatres. The $29.99 rental paired with the streaming service subscription isn't the long-term strategy unless by some miracle they discover they actually make more money than they would with theatres without any of the hassle (but my guess is there is a more limited financial ceiling with this strategy). Instead, this is more than likely a Covid-19 strategy that gets extensively modified once it is safe for all movie theatres to open again and have maximum capacity.
Here is the thing, most reports point to everything opening up at full capacity to still being a long way off with the current way of life being the new normal for the next two to three years. That is a long time for limited capacity movie theatres and a less than ideal way to make money back on all the big budget movies that are currently waiting on the shelf. My guess is that if Mulan is a hit, then over the next several months we are going to see streaming service subscribers-only high premium VOD releases for movies like Black Widow, Wonder Woman 1984, F9, Soul, No Time to Die and Top Gun: Maverick.
My biggest hope is that movie theatres start coming up with a better strategy than screaming 'no fair' and spouting empty threats about boycotts, and instead find a way to get in on this action or are more open to 'day and date' for now with the theatres that can have patrons. I think Disney's bold movie is going to end up making them look like geniuses. Studios need to come up with strategies to do something with all those movies growing mold. But when Covid-19 becomes a thing of a past, I still really want there to be a local movie theatre open to see the hot new releases.
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