If streaming is profitable, theaters might not survive
I love going to the movies, buying buttered popcorn, and settling down into a cushy seat in the dark of a theater. Nothing feels better than escaping into the big-screen and letting the world go on without me for a few hours.
But my favorite "escape" of going to a theater may quickly become a thing of the past.
The New "Mulan"
The action drama Disney film of Mulan is a remake of the original animated version released in 1998. The new movie was expected to be a blockbuster success, following in the wake of Beauty and the Beast, another film that moved from animation to the realms of reality.
Then COVID-19 hit, delaying the much-anticipated March release of a film that cost in excess of $200 million to make. Add a marketing budget of between $100 and $150 million, and Disney's Mulan was an expensive venture - especially when no one could see it.
Disney had lost revenue from the COVID closing of its theme parks, nearly $5 BILLION dollars during their forced hiatus, and that was just from the parks. Their cruise ships weren't running either.
Disney's wallet was hurting.
Since the pandemic has not disappeared, and since movie theaters haven't even been able to reopen until recently - and then not at full capacity - Disney studios had to think outside the box and do something unprecedented for the major movie release of Mulan.
They decided to launch this major motion picture, not in the theaters, but streaming through DISNEY+ on September 4th, 2020.
Disney's $30 Ticket Approach
I couldn't believe it when my husband and I checked into watching the movie from home. Not only would we have to add yet another streaming service at $6.99 per month, but we would also have to pay $30.00 to see it, almost double of what it would cost if we went to the cinema.
What kind of sense did this new marketing approach make? I must be missing something.
Indeed I was.
I was missing much of the backstory as to why it might be more profitable to stream the movie than release it to theaters. Many reasons existed:
If a movie is released to theaters, Disney would have to give 50% of the box office receipts to those studios and theaters.
By using their own streaming service, they don't have to share the revenue.
If one million people sign up for just one month so they can watch this specific film and they pay the one-month subscription and the price of the movie, Disney gains $37 million dollars.
If half of the people who think they're only signing up for one month decide to keep their subscription, Disney makes an additional $35 million.
The Benefits of Marketing to a Streaming Audience
Disney+ already has 60.5 million subscribers, a remarkable number that far exceeded their original goal of attaining 60-90 million subscribers by 2024. They've already reached that goal, four years earlier than anticipated.
The wisdom of the choice to market to a streaming audience is obvious. When a company already has more than 60 million dedicated fans, it's easier to get an additional sale than to recruit new business from a wide-open audience of general movie-goers across the world.
Don't forget that marketing can be done, not just in the United States, but across the globe. Countries in Western Europe, Canada, Australia, and New Zealand will have access to Disney+.
If people are excited to see the movie, they're more willing to subscribe, and every subscriber is guaranteed income.
Steep or Cheap?
$30 dollars sounds like a lot for two people, but it's not for a family. If you have a family of four, buying movie tickets and providing even a modicum of snacks will cost around $80.00.
Streaming the movie at home allows more comfort, lounging in jammies on couches and beds, taking bathroom breaks when necessary without missing any of the action.
The cost of food is dramatically decreased when you serve snacks at home. When the high-priced combo packs at theaters with a small popcorn and a drink costs between $6.00 and $10 dollars and a box of candy runs around four bucks, eating from home is a real bargain.
A Different Way of Thinking
The high-ticket price for Mulan is not the first time this approach has been tried. Universal offered the Trolls World Tour to its subscribers for $19.99, an approach that is catching on.
A new release may function one of three ways:
1) It may be offered to subscribers at no cost (like Disney's Hamilton) in order to get more subscribers.
2) It may be used to bolster a streaming service's catalog, enticing more members to join because of the wide collection of notable choices.
3) It may be used as an add-on purchase for premium quality, new releases.
The Effect on the Film Industry
In countries where the streaming service is not available, Disney is releasing Mulan to theaters, so millions of viewers will be possible in China where the movie was expected to be a hot release. In select areas across the world, there will be theaters.
But in many parts of the world where streaming services are available, if people can stay home and watch major motion pictures in their jammies, will theaters survive?
What will filmmakers do if they don't get to use the "big screen" as much? They'll adapt, just as Martin Scorsese did when produced the Netflix movie, "The Irishman."
And actors? You bet they'll go where they're needed. Already, many big-name celebrities are appearing in movies made for streaming services.
The Experiment of Marketing Mulan for the Streaming Audience
The movie, Mulan, and the change in marketing from targeting a mass-market to focusing exclusively on streaming audiences may change the future of movies. If Disney can be profitable with Mulan, more films will be released for streaming at home.
It may change everything.
I'm all good with progress, but I'm sad about the possibility of losing that in-the-cinema-popcorn-small-big-screen-dark-auditorium experience. Escaping at the theater seems so much easier at the theater than in my living room.