‘Mulan’ on Disney+ Could Launch the PVOD Blockbuster Era

Remember last week, when theaters worried about Universal negotiating a 17-day theatrical window? Good times.

On August 4, Disney announced it would bypass theaters to release “Mulan” on Disney+, with a $29.99 surcharge, on September 4 — the same Labor Day weekend currently occupied by Warner Bros.’ “Tenet,” which opens September 3. Traditionally, this holiday weekend doesn’t interest distributors; it’s a date that favors low-budget filler and the occasional horror title, as audiences are less likely to spend the last days of summer in movie theaters.

But these are nontraditional times. Both films have seen multiple date changes. Both films were viewed as exhibition lynchpins — the titles that would give theaters a one-two shot at restoring their business. Now, we’ll see both high-caliber movies open head to head on very different platforms.

Disney CEO Bob Chapek announced the “Mulan” move on an earnings call.  He didn’t call it a strategy, and alluded to it as a “one-off.” “We see this as an opportunity to bring this incredible film to a broad audience currently unable to go to movie theaters,” he said, “while also further enhancing the value and attractiveness of a Disney+ subscription with this great content.” He added that this would allow them to “learn from it and see what happens not only in terms of the uptake in the number of subscribers we get on the platform and the actual number of transactions on the Disney+ platform that we get on that PVOD offering.”

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All it takes to convert an experiment to a business model is success. If “Mulan” finds the audience Disney anticipated for its $200 million live-action remake of its 1998 animated smash (also: the most expensive film ever directed by a woman), and theaters seem like an unsure bet, it’s hard to imagine that the studio wouldn’t be interested in considering a similar approach for, say, Marvel’s “Black Widow” or “The Eternals.”

Not only is Disney demanding an ultra-premium price of $29.99 for “Mulan,” it also requires a Disney+ subscription as a prerequisite — and, of course, it wholly owns this exclusive platform. No revenue splits required. High risk? Could be. But that’s also an opportunity for an extraordinarily high return.

“Mulan” will receive a theatrical release (dates TBD) in countries where Disney+ is unavailable. This means most of the world, including leading gross performers China, Russia, and Korea. That suggests potential for significant film rentals, but this also looks like a play to expand its overseas subscription base. While the U.S. still faces significant challenges in restoring theater operation, that’s not the case in Disney+ territories like Canada, the U.K., France, Italy, and Germany.

More “Mulan” details are still to come (including how long a $29.99 rental buys you, and when it becomes a standard title on the Disney+ platform). Domestic exhibition sources tell IndieWire that they will not have the chance to play the title, even if they chose to ignore the day-and-date play.

Losing “Mulan” could be devastating. The centerpieces for U.S. theaters’ recovery were “Tenet” on September 3, “Mulan” soon after, and “Wonder Woman 1984” on October 2. Other, smaller, titles are also in play, but the blockbusters were viewed as key to gaining, and maintaining, audience momentum. With “Tenet” as the only major film between theaters opening August 21, and “Wonder Woman” six weeks later, theater owners will have to weigh if that’s enough.

“Trolls World Tour”

DreamWorks Animation

“Trolls World Tour,” the clear precursor, has grossed perhaps as much as $150 million. “Mulan” is by far the most expensive film to debut on PVOD, but it’s also a pre-sold title that’s as highly anticipated as any family film this year. It was anticipated to gross $1 billion or more in worldwide theatrical release.

Disney+ now has 60 million subscribers worldwide, the majority in the U.S. If 10 million of those subscribers buy “Mulan,” that’s $300 million — and all revenue goes to Disney. The marketing model changes as well: This will be pushed on the streamer nonstop for the next month, at incremental cost. Disney also has ABC and other tv/cable networks as promotional partners, all of which burnishes the Disney+ brand.

Disney has multiple businesses, many of which are battered. After the earnings call, it saw an immediate after-hours jump in its stock price. The stock market can be fickle, but this suggests that the entertainment giant is serious about adjusting to new realities. It’s not without significant risk, but all future bets are off if “Mulan” does well.

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