Entertainment

'Mulan' went to Disney+ out of necessity; don't expect $30 blockbuster releases to become the norm

Key Points
  • “Mulan” will debut on Disney+ on Sept. 4 for $29.99.
  • Disney CEO Bob Chapek said Tuesday that "Mulan" was a "one-off" and not a signal that the company was swapping to a new business model.
  • Analysts don't foresee this model becoming the norm, but note Disney will be keeping a keen eye on how "Mulan" fares on on-demand.
Liu Yifei stars in Disney's "Mulan."
Disney

After Disney announced that "Mulan" would find a home on its streaming service for the premium price of $30, some speculated that "Black Widow" and other blockbuster features from the studio could be next.

Not so fast.

The unexpected move to bring "Mulan" to on-demand was done out of necessity. With theaters in the U.S. unable to reopen to significant crowds due to an ongoing resurgence of coronavirus cases, Disney was forced to push back the film again and again. 

"The company has said this isn't the norm," said media and streaming analyst Dan Rayburn. "They essentially were forced to do it due to the pandemic."

Exiting its August release date, "Mulan" was running out of real estate on the movie release calendar. Warner Bros.' "Wonder Woman 1984" is slated for release in October, and then Disney's "Black Widow" and "Soul" in November, followed by three Fox film releases.

Unless Disney wanted to hold off on releasing "Mulan" until 2021, which is also getting crowded, it was going to have to move one of its other films, uprooting its schedule yet again.

"The decision to move to Disney+ was not an easy one, however the studio could not determine a safe worldwide theatrical date, so they made the next best decision to put it onto Disney+ and theatrically distribute in those countries that are open," said Kathryn Arnold, a film producer and entertainment consultant.

A 'one-off'

Disney pushed "Mulan" to Disney+ in all the countries that currently have the service. In regions where the streaming service is not present and the company doesn't have plans to make it available, "Mulan" will go to theaters. That means that it will likely reach Chinese theaters, where the film has long been expected to overperform.

Liu Yifei stars in Disney's "Mulan." Disney CEO Bob Chapek said that "Mulan's" streaming release is a "one-off" and not a signal that the company was swapping to a new business model, but the company will pay close attention to how many accounts opt to purchase the film on Disney+.
Disney

CEO Bob Chapek said Tuesday that "Mulan" was a "one-off" and not a signal that the company was swapping to a new business model. However, he noted that they will be paying close attention to subscriber numbers and how many accounts opt to purchase the film on Disney+.

The $30 price tag is Disney's way of recouping the film's $200 million production budget and its estimated $100 million marketing budget. While some consumers have balked at the steep price, the expectation is that parents will be keen to pay the fee to have new entertainment to show their kids. After all, the cost to buy "Mulan" and have access to it on Disney+ in perpetuity is cheaper than taking a family of four to the cinema.

Disney will supplement those on-demand purchases with the theatrical releases in countries without Disney+. So, "Mulan" has a good chance of recouping its production costs and actually making a profit.

"Whether Disney will repeat this process will be [determined by] a combination of factors: If theatrical distribution becomes possible once Covid has subsided and theaters are open worldwide, the success of this premium early adopter program, and whether producers and directors will agree to this type of distribution in advance," Arnold said, in an email. "Once this precedent has been set, producer/directing teams will be aware that this is a possibility and will address this possible outcome in their negotiations."

No path to normalcy

Disney is all too aware of how important the box office can be to its bottom line. Last year, the company's films accounted for nearly 40% of all ticket sales in North America, or more than $3.72 billion. Globally, Disney banked about $13 billion, including a record number of $1 billion releases.

"I don't believe anyone set out to make a magnificent production such as 'Mulan' and have it only be seen on the small screen," Arnold added.

While this may not have been the plan Disney had for 2020, it is the new reality. With no clear path to normalcy without a vaccine or without U.S. cases decreasing, the company could be forced to make more tough decisions in the future.

Still, it's not likely the company will look to use the premium on-demand model that it is using for "Mulan" for all movies.

"I doubt it will look to have premium add-ons for smaller films," said Eric Handler, managing director of media and entertainment equity research at MKM Partners. "They have already added 'Onward' to Disney+ without charging a premium."

Disney also added "Hamilton," which it shelled out $75 million for, and will place the once theater-bound "The One and Only Ivan" on the service for free as well. 

"I think it's a sign of the times," Handler said.

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