Disney's «Mulan» controversy: do big studios still need cinemas?

Luca Fontana

11.8.2020

Translation: Patrik Stainbrook

Disney just moved «Mulan» from cinema to Disney+. One of the last remaining 2020 blockbusters. Cinema operators are beside themselves. More than that; they're fearing for their existence. Do large film studios still need cinemas?

«Mulan» won't be coming back.

Instead, the film will be released on Disney+ on September 4, 2020 in the USA and in a few unspecified European countries. For $29.90, in addition to a subscription to the Disney streaming service.

Cinema owners are fearing for their existence. They won't be able to survive long with the same old flicks like «Bad Boys For Life» or «Harry Potter and the Prisoner of Azkaban».

But there's an even greater concern: what if Disney's «Mulan» experiment works? Do large studios still need cinemas at all?

Disney makes a promise: a one-time thing

Without question: the industry is in a state of upheaval.

A slap in the face to remaining cinema operators who are trying to oppose the digital change. Cinemark and IMAX, for example.

The origin of the dispute was «Trolls World Tour». While cinemas around the world remained closed in the spring, Universal instead put its animated film into online distribution for 15 to 20 dollars – the price of a cinema ticket. This paid off: in just three weeks, the studio earned almost 100 million dollars in the US market alone.

Jeff Shell, NBC Universal's CEO, then made it clear that in future, films would be released both digitally and in cinemas simultaneously. A day-and-date release, then. AMC, fearing for potential moviegoers, angrily announced that it would no longer show Universal films if Shell stuck to his guns.

Let's do the math.

The question is: how likely is it that 22.1 percent of paying subscribers will buy the film?

Angry individual viewers could boycott the model. But Disney's real target group are and have always been families. Families with parents and two children for whom a visit to the cinema – for example – including tickets, drinks and popcorn easily costs around 100 dollars. That makes $29.90 look cheap.

So let's move on: if about half of the subscribers buy the film, Disney would make a whopping 904.5 million dollars. Almost a billion. And no cinema operators or distribution partners would have to share in this success. The money would flow directly into Disney's coffers. For a film that doesn't even feature star directors or famous actors.

Overreaching? Who knows... But cinema operators fearing that their auditoriums will no longer be needed in view of such figures are terrified.

Disney relies on the only thing that still works

In concrete terms: in just three months, the Walt Disney Company has suffered a loss of 4.7 billion dollars. In the same quarter a year ago, the profit was a whopping 1.8 billion dollars – thanks to the record- breaking «Avengers: Endgame».

As expected, this can be blamed squarely on the pandemic. It's hit Disney hard in almost all business areas: interrupting film and series production, generating hardly any income from feature films, closing theme parks worldwide and removing income from holiday resorts and cruises with Disney theme ships. And there's no end in sight.

But: measured in figures, Disney+ remains in deficit. For now, that is. The growth generated by the pandemic has also been thanks to cheap prices and free offers.

In any case, Disney is doing the best in a bad situation with its move to show «Mulan» not in cinemas but on its streaming service. To release the film in cinemas now or in a month – or half a year, even – would be a risky decision. At least for as long as there are only a limited number of movie theatres available and the development of the pandemic can hardly be predicted.

A sign of the times: the streaming business is more important than ever. But it remains to be seen whether subscribers are willing to accept the expensive Mulan model.

A declaration of war towards cinema operators?

Disney, slowly strangling cinemas. Or not?

However, Disney, despite its great streaming success, won't be interested in losing the cinema as a big stage for its most important blockbusters. Mega events – like Marvel films for example – are too important. Spectators flock to the cinemas in droves and disguises, turning a film into an experience. The global appeal is too great, fuelled by record attendance and revenues that reinforce the brand's sheer appeal in a way only cinema can.

Then this is the nature of human beings: we are social. The Greek philosopher Aristotle said this hundreds of years before Christ. We are beings who are designed for and want to form communities. Be it in a clique, a class, a club, a sports stadium filled to thousands – or simply in the cinema.

As gloomy as the current situation for cinemas may be, there are arguments against the downfall of cinema. At least against a global one. Large cinema chains in particular have been trying to reinvent themselves for years. Like by adding sofas or even beds instead of seats in cinemas.

The fact that rather small operators with niche films beyond the mainstream are trying to compete with big multiplex cinema chains with blockbuster events – sometimes successfully, sometimes less successfully – is another issue.

And it's just these operators that are also competing with niche streaming services.

While we're on the subject, my colleagues Phil, Simon and I recently discussed «Mulan» being on Disney+ in a podcast. If you want our personal opinions on the topic, then listen here.

Luca Fontana

Senior Editor

Luca.Fontana@digitecgalaxus.ch

I write about technology as if it were cinema, and about films as if they were real life. Between bits and blockbusters, I’m after stories that move people, not just generate clicks. And yes – sometimes I listen to film scores louder than I probably should.

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