In an absolutely shocking move, Disney has announced it will make Mulan, one of the oft-delayed movies affected by COVID-19, available on September 4 via its streaming platform, Disney+. I literally did not think this was possible—no one did! Mulan cost a rumored $300 million to make (Disney is claiming $200 million), and there is ZERO evidence movies that expensive can make money on premium video on demand. Disney is taking a shot in the dark here, hoping they can be the ones to prove market viability for blockbusters on PVOD. Here’s how it will work: on September 4, Disney+ subscribers can access Mulan for an additional $29.99. If you’re not already a subscriber, you can subscribe for $6.99/month, so basically, it will cost you $37 to watch Mulan on opening weekend (and to “own” the movie as long as you have Disney+, just like how downloadable content in video games work). Disney+ is not available globally, though, so those markets without the service, such as Latin America, will get the movie in whatever theaters are open per local COVID-19 restrictions.


Obviously, $37 is a lot of money. But a family of four can easily spend $50+ on a trip to the movies, so it’s a bargain for families, roommates, or any situation where more than three people will be viewing together. It’s probably a wash for couples—in my area, two people run about $40 for a night at the movies. For singletons, it’s not a bargain at all unless you’re dying to see Mulan. The limited “ownership” of the movie somewhat improves the value, but it remains the best bargain for families and groups, which is consistent with Disney+’s family-friendly branding—they want the people who will watch their movies, buy their merchandise, and then vacation at their theme parks and cruise lines.

Disney wants all the money, but the question now is how much money is there to be made? The data we have on PVOD thus far mostly comes from Trolls World Tour, which Universal released at the beginning of the pandemic via existing online platforms like iTunes, Amazon Prime, and cable on demand services. Estimates put their first-month earnings at $100 million, of which they kept 80%, with 20% going to their digital partners. Disney, however, is releasing Mulan on their own platform, no middleman. They will get 100% of whatever Mulan makes. The threshold is high, because Mulan was expensive to make, but they don’t have to split the “box office”. In a traditional theatrical release, Mulan would have to clear $600 million to break even (assuming Disney’s $200 million budget, plus $100 million in marketing), since theaters keep about half the revenue. Now, however, they just have to make $300 million. Can they make that much? Who knows! We’re about to find out!


What is clear is that Disney NEEDS money. Yesterday morning, before the Mulan news broke, Disney’s third-quarter earnings report came out and revealed a $3.5 billion loss due to the pandemic. Basically the only thing working for them right now is Disney+, which saw a “Hamilton bump” over the last month. Undoubtedly, someone at Disney has run the numbers and projected what they could have made had they charged extra for Hamilton, and that played into their decision regarding Mulan. Disney is not a risk-taking company. They would not be trying this strategy for Mulan if they didn’t think it was worth it, either for the potential revenue, or even just the data they’ll get from releasing a major movie this way. As I said, there is virtually no information on how PVOD works for big-budget movies; even Trolls World Tour is a fraction of the cost of Mulan and thus not directly comparable. But Disney must be seeing some signs that there is money on the table, for the data if nothing else (other studios will be DYING for Disney’s data on this release, and you can bet they will make their rivals pay for the privilege of seeing how it all worked out).


Interestingly, Disney insists this is an “anomaly” and PVOD will not become the future of Disney films. During the earnings call, Bob Chapek (the limbo CEO while Bob Iger hovers in the background) said this will be a “one-off, as opposed to saying there’s some new business windowing model we’re looking at.” C’mon Bob II, that’s EXACTLY what this is. If Mulan generates new subscribers plus revenue from premium rental, Disney has a new windowing model for future theatrical releases. If nothing else, they’ll have a path for movies they release that bomb, like Dumbo did last year. All of these on-demand experiments are increasing the number of release options studios have going forward, no matter what they say on the record. 

It’s all going to come down to Labor Day weekend. Tenet is rolling out in whatever theaters are open in America on September 3. On September 4, Mulan hits Disney+. By Monday, September 7 the story will be told. If both movies do strong business, then theatrically exclusive releases and PVOD releases can co-exist. If both do anemic numbers, we’re going to end up with some kind of patchwork release strategy where studios move films around based on individual performance in individual markets. If Mulan is strong but Tenet flounders… it’s hard not to think that will be the death knell for theaters. The one thing holding theaters up to this point has been blockbuster cinema and the belief they need theaters to make enough money to justify their exorbitant budgets. Should Mulan prove otherwise, all bets are off. Unless and until, that is, the Supreme Court reverses the Paramount Decree and allows studios to buy theater chains. In which case, Disney will just buy AMC and then they really will make all of the money.