Disney’s plan to give Mulan a digital release leaves cinemas reeling

Time is working against movie theatres as the number of big budget video-on-demand releases increases and the cinema habit starts to grow cobwebs, writes James Moore

Disney+ subscribers can pay $30 to watch the new ‘Mulan’ (Walt Disney Studios)

With Mulan, Disney has slashed at cinema operators like one of the blades wielded by the blockbuster’s eponymous heroine.

With the pandemic still raging in the US, the House of Mouse has opted to release the live action version of the much-loved animated blockbuster on Disney+, its flagship video streaming service, for a premium rental price – in a move that created many ripples but not much surprise.

The entertainment giant’s motivations can easily be seen if you take a cursory glance at its just released third quarter results.

They weren’t as bad as Wall Street had feared, but the pandemic’s red ink is still all over them.

A 42 per cent fall in revenues, a $3.5bn (£2.7bn) hit to operating profits at the parks, a total pandemic related charge of nearly $5bn, plus the continuing decline in Disney’s traditional media.

The bright spot? Streaming. The investor relations section of Disney’s website offered a clear nod to the direction of travel with a picture culled from Hamilton, the smash-hit musical that recently went live on Disney+ to broad acclaim, at the top of the page.

Disney+ had 60.5 million paying customers as of Monday. With a reported $200m sunk into Mulan and no real clarity on when he might be able to recoup that, it isn’t hard to see why CEO Bob Chapek pushed the button.

He’ll have seen the success of Universal’s Trolls World Tour, which reportedly racked up $100m in rentals over three weeks, a higher proportion of which was retained by Universal than it would have recouped via a theatrical release. So why not roll the dice?

He’ll also have seen the blowback Universal’s owner Comcast took from cinema chains in the wake of its decision, but Disney is the global box office king. It is an uncomfortable fact, but theatres need the Mouse more than the Mouse needs them.

It will be interesting to see whether there’s any resistance to Mulan’s $30 price point, which is $10 more than for Trolls but reflects the fact that company’s outlay is about twice what Universal spent on its outing.

Chapek insisted it was a one off and normal service will be resumed. But what if it proves successful and the pandemic continues to hang around? Marvel fans may have been fooled by a fake tweet claiming Black Widow, one of Disney’s forthcoming Marvel properties, was poised to follow but speculation about it’s future isn’t going to die down anytime soon. The flames will be fanned again if Mulan washes its face at $30m.

Shares in cinema operators took a hit on Wall Street following the announcement of its video-on-demand release, and perhaps with good reason.

Supporters of cinemas had expressed hopes that customers would flock back as soon as they re-opened. I was among them.

I’m no longer as sure as I was and the doubts will only grow the longer the pandemic goes on, the more releases like Mulan and Trolls 2 that emerge. That’s true even in in Britain, where some theatres are operating, albeit mostly with a diet of vintage movies and older releases.

Working against them are time, habit and fear. The longer the pandemic goes on the more likely it is that the cinema habit will grow cobwebs as the home entertainment one becomes entrenched. If you ally that to a residual nervousness about going out that may persist for a while post pandemic – polls show it to be less pronounced among younger people but it is still there – and the omens are not good.

Finding ways to swing the pendulum back in their direction will not be easy for movie theatre chains, particularly given the hits their balance sheets have taken.