Disney Carves Out An Owned Future With Mulan

None of this is that surprising, tbh.

In response to the (largely indefinite) closure of movie theaters around the country because of the ongoing Covid-19 pandemic, studios have generally taken one of three potential alternative paths:

  1. Punt: Just keep kicking the release date down the road, hoping that the situation improves by then and the movie can be sent to theaters.
    1. EX: Wonder Woman 1984, Tenet, Fast & Furious 9, Black Widow
  • PVOD: Accepting the reality that not everything can be held for a later date, some titles have been sent straight to VOD, with premium price points to make up for the loss of theatrical revenue.
    1. EX: Scoob!, The High Note, Bill and Ted Face The Music
  • Streaming: Whether it’s an owned platform like Disney+ or a third party like Amazon or Netflix, some titles have been handed off to streaming because the economics make more sense or it fills in some other part of an overall strategy.
    1. EX: Artemis Fowl, Without Remorse, Hamilton, The Lovebirds

With no end in sight for the Covid-19 outbreak it’s only logical studios would seek out some alternative release plan. They are in the production and release business and if they need to they will seek alternative distribution methods. That’s similar to how changes in the retail world as a whole has led to the rise in direct-to-consumer businesses and more.

Add to that the fact that so many of 2020’s planned movies have been delayed by several months – in some cases up to a year – that the 2021 release schedule is backed up all the way to the Tri-State interchange, limiting any studio’s options.

This Did Not Go Over Well

The reaction from theaters has been predictable, beginning with AMC Theaters’ promise to never play future films from Universal after it sent Trolls World Tour to PVOD in April. Most recently, those two parties announced a new deal wherein future films would have shorter theatrical-to-home windows. Smaller theater owners have also had time to express their displeasure while other large chains like Cinemark and Regal have offered their own skeptical takes.

While certainly unprecedented, the deal between Universal and AMC – which has reportedly been offered to other studios – doesn’t break many existing distribution norms in function, even if the details are largely new. The “home” release will still take advantage of the platform infrastructure developed and offered by established players like Apple, Amazon and others.

Still, exhibitors kept holding out hope that one or both of two titles – Tenet and Mulan – would provide the light at the end of the tunnel they needed, offering an attractive film that audiences would, however reluctantly, come back to theaters to see after months at home.

Alternate Futures

Those hopes faded a bit when Warner Bros. announced a unique release plan for Tenet that involved the movie coming out overseas in late August and then in whatever U.S. theaters are available over the Labor Day weekend in early September. That’s bad news for domestic audiences and exhibitors (but great news for Torrent software providers) who are essentially being pushed down the priority list and who may have one of the year’s most secretive plots spoiled for them.

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They diminished almost entirely last week when Disney revealed it was creating its own fourth option for the September 4th release of Mulan on Disney+. The release is notable for at least two reasons:

First, it mashes up a couple of the existing paths to create something wholly new. While many media companies have worked to create their own streaming platforms in the last year, those have largely been subscription services, and once you subscribed you had access to everything. Even tiered services like Peacock didn’t charge you extra for one specific title, you might just have to upgrade to the next membership level.

This works differently, essentially creating a PVOD service within the existing subscription framework. If you’re not a member, you don’t have access to the PVOD content, meaning the true cost of the rental is the $29.99 list price plus at least the $6.99 monthly fee. In other words, the cover charge you paid at the door doesn’t grant you entrance to the Champagne Room.

Existing platforms like iTunes, Amazon and others should be watching this as closely as theater owners have been over the last several months. If Disney – or any other company – can find some success in this way they no longer become the one-stop, producer-agnostic shop they’ve been to date.

Second, it creates a whole new marketing paradigm. The campaigns for movies like The Lovebirds, Scoob! and others have changed, often mid-stream, when their release futures were altered, with the call-to-action shifting from “In theaters on…” to “Watch it at home on…” Even still, the expected action on the part of the consumer was only a single one. Instead of “buy a ticket” it was “subscribe” or “download.”

Whenever Disney launches a new phase of Mulan’s campaign, it will have to communicate a two step process: 1) Subscribe to Disney+, then 2) Pay $29.99 for this single movie. That will be a little harder to get through audiences and could create a fair amount of customer confusion when the movie launches as people are caught unaware they have to make an additional payment to watch the movie.

What’s Next?

That the reoriented campaign for Mulan wasn’t ready at the same time the announcement was made is slightly surprising since Disney is masterful at coordinating initiatives to take advantage of a moment.

Warner Bros. not having a new phase of Tenet’s campaign is equally surprising, though a bit more understandable given how, at least for U.S. theaters, it’s still largely contingent on a best case scenario being available. It is, in other words, less concrete and so WB is likely holding its fire.

On top of those, there are still a number of high-profile titles that are supposedly coming to theaters later this year.

The New Mutants is, against all odds, still scheduled for late August.

Wonder Woman 1984 is still scheduled for late September, but at this point there’s almost no time to mount a campaign for the movie even if that date holds.

Black Widow and No Time To Die are still scheduled for early and mid-November, which is slightly more realistic but becomes less so with each passing day.

The campaigns for those last three have been paused for a number of months now, and would have to fight through the noise of the daily news cycle – a cycle that includes 1,000 or so Americans dying each day and a ramping up presidential election – to get people’s attention. That adds to the odds some alternative will be sought, as it may not be possible to get a critical mass of awareness that overlaps with the segment of the population willing to participate in mass entertainment without a Covid-19 vaccine, much less a cohesive testing and tracing strategy.

Which option is chosen will be determined by what each studio thinks it can manage as it seeks to make a wide range of stakeholders, each with competing priorities, happy with the proposal.

Expect Streaming and Premium VOD to Stick Around

Just like the rest of society, there may not be a return to what was once normal.

To hear studio executives tell it, they turned to Premium VOD and streaming during the Covid-19 quarantine only out of necessity. Movies like Trolls: World Tour, The High Note, Artemis Fowl and others were pulled from the theatrical schedule and released on home video platforms because the studios had no other available choices. Theater owners, as well as NATO, made various statements about how they would remember how studios have turned against them, but most of those statements seem to have faded in intensity over time.

During a virtual CineEurope presentation, more studio heads made more comments about how excited everyone was about theaters reopening, confident that audiences are itching to get out of the house and see movies on a *real* big screen again.

That belief seems to be rooted in the basic idea that not only are behaviors ripe for changing but that outlets for that changed behavior will be available. Neither may actually be the case.

One study from Google indicates that consumer habits that have been evolving over the years may have taken firmer hold during the Covid-19 shutdowns across the country, meaning people are less likely to venture out and about for their shopping and entertainment fixes. In some ways that may be tied to bigger shifts across society and within the economy, including the higher frequency of someone working from home, the newfound love of cooking for themselves and more.

Those shifts as they relate to streaming behavior are expected to be represented at this year’s Newfronts as media companies make their virtual presentations to advertisers, positioning those platforms as the place where people are and they need to be. Spending on streaming entertainment isn’t expected to fade anytime soon either. There may be some level of subscription fatigue happening, but that’s likely only because people dipped their toe in so many different pools during the early days of stay-at-home orders, taking advantage of free trials or deciding now was when they were finally going to watch “The Handmaid’s Tale” and then cancel Hulu after finishing it. So it may be that these behaviors have now become entrenched in many households.

Add to that the ever-changing landscape of the theatrical industry, one that is already working from a deficit in part because the issue of wearing masks has become one with all sorts of political implications and beliefs. Add to that the recent shift of both Tenet and Mulan to August and it’s clear the summer movie season has all but vanished. There may be a few titles that still come out in drive-in locations and the handful of theaters in states that have done a better job of containing outbreaks, but that’s it.

In short, there’s a great deal of uncertainty about what’s next for the public health crisis we’re in the midst of and what the retail response to that is going to be. Texas and Florida are reversing course and closing bars again, while other states like Illinois are doing alright and slowly reopening more and more businesses.

It won’t take much for premium VOD to become much more popular than it already is. Really it seems to come down to 1) Price, and 2) Selection. If Wonder Woman 1984 were available to rent day-and-date with theaters, it would be massive, especially if that rental were just $9.99. To date the titles have been kids films and mid-tier dramas, but a blockbuster at a reasonable price would be a game-changer, one that could potentially blow the market wide open. That price point would be a stark contrast to the cost of taking a family to the theater, including the sunk time in driving etc that goes with it.

Premium VOD may never land as big a fish as WW84 or Black Widow, but it’s very likely it becomes a regular part of studio’s release planning, especially for the kinds of titles that are felt to have only moderate potential for theatrical success. Even so, that price point will have to come down, especially on the kids titles where the value for parents is in repeat viewing.

It won’t be long given the continued issues around what businesses are or aren’t open and what the protocol is for visiting them before the behavior around staying at home and bringing the world there solidifies even more than it already has. Studios will have to adapt to that, as will the theater owners who have been avoiding this conversation for over a decade.

Early Digital Releases Could Impact Marketing Efforts

A recent report from Bloomberg hints that the patience of movie studios is running out, leading at least some to move forward with talks with Apple and others about digital rentals being available just weeks after theatrical release. Those studios are, it seems, tired of trying to work with theater chains which have an active interest in blocking such efforts, and so may proceed with or without their blessing.

While this kind of new windowing is, as the story points out, unlikely to move forward until it has the blessing of the major chains, the studios may be hoping presenting this as a fait accompli may force theater owners to agree to something instead of blocking everything.

It’s going to be super-interesting to see how marketing campaigns may change to accommodate this new release pattern. There are two scenarios that come to mind.

Retain the Status Quo

The first option is that things remain more or less as they are. Studios right now are focused squarely on theatrical release being the central element of most all campaigns, with “buy tickets for opening weekend” being the most common call to action. There are slight variations on that here and there, but it’s a more or less universal approach. That’s usually followed up a few months later with a smaller paid campaign that’s built around the home video release, with TV commercials encouraging people to find the movie on Blu-ray and online ads leading to iTunes or other online platforms.

If the studios want to lessen the pain of the new reality for theaters, this is the approach they’ll maintain with their marketing.

One Campaign, Two Messages

If, however, the studios want to be a tad more antagonistic, they could start lacing in other CTAs, namely an additional message that says “…and then find it on iTunes three weeks later” or something along those lines. Whatever the specifics, it would clearly identify two options the audience can choose from: The theater now (depending, of course, on whether the film is even playing near them) or a premium VOD platform just a few weeks out.

That’s very different and essentially gives the audience an “out,” allowing them to shrug and opt to sit this one out, then make a fresh decision when it’s available for digital rental. It’s hard to see how this doesn’t immediately and substantially impact theater chains, which are already seeing lower tickets sales and foot traffic. It’s different even than the model used by Amazon Studios, which is much more along the lines of the traditional theatrical-centric marketing, making new mention of on-demand viewing until it’s actually available on Amazon Video.

Whatever happens, it’s clear that this discussion is coming to a head. It may not be one theater chains want to have, but studios obviously think this is an important step to take to shore up *their* business model, even if it impacts that of a long-time and valued partner.

Chris Thilk is a freelance writer and content strategist who lives in the Chicago suburbs.