The global threat of the novel coronavirus, or COVID-19, has disrupted every commercial industry including Hollywood. As productions pause and theaters close to encourage social distancing, it's a weird time for Disney, the monolithic studio with tentpole movies like Mulan and Black Widow waiting to release.
With both Mulan and Black Widow delayed indefinitely, everyone in and out of Hollywood is eyeing how the studio will release its two biggest blockbusters of the year. Just months after the launch of its own streaming service, Disney+, is it plausible for Disney to skip theaters and instead release its movies on the streaming platform?
Two analysts tell Inverse that's very unlikely. Here's why — and why it might happen anyway.
“There’s no downside for Disney simply waiting a few quarters until all of this clears.”
"That doesn't make any sense," says Dan Rayburn, author, analyst, and chairman of the Streaming Summit.
Because Disney is so big and valuable, it can afford to "wait two, three, four quarters" to release Mulan in theaters, rather than releasing it on a streaming service right now.
"These companies are looking to get the most out of their assets they can," Rayburn says. "They spent the most amount of money to produce this content. Why would they take less money just to push it out now? It doesn't benefit their business in any way. There’s no downside for Disney simply waiting a few quarters until all of this clears."
Paul Dergarabedian, box office analyst for Comscore, agrees. "It doesn’t make financial sense to go streaming with a movie where the ability to earn back not only the negative cost but the marketing cost and turn a profit, would be prohibitive."
Disney can afford to wait
Dergarabedian says the question now isn't if Disney's makes its new releases streaming on Disney+ during the pandemic, because it won't. Rather, it's what happens after the pandemic ends and people flock back to theaters.
"What will the competitive environment look like when they're released?" he says. "Any big movie, and I mean big budget, high profile blockbuster movies, if that moves, this is no small thing."
For Disney to release a movie like Mulan on Disney+, the math simply doesn't check out. As severe as the coronavirus may be, the analysts don't see it severe enough to compel Disney to put an event film like Mulan, the mega-budget wuxia remake of its 1998 animated musical, on Disney+, where most of its customers have already paid for subscriptions.
“Disney's invested a lot of money into these blockbusters.”
The same goes for Black Widow, the next entry in the dominant Marvel franchise that grossed $5 billion worldwide in 2019. The bump in a few new million subscribers versus hundreds of millions around the world paying for a ticket just doesn't compare.
"Disney's invested a lot of money into these blockbusters," says Rayburn. "They have nothing to lose simply by having to wait. Even if they have to wait a year from now. There's no time sensitivity to this."
Both Rayburn and Dergarabedian also say that when it's safe to be out in public again — the Trump administration told American citizens on March 17 that may happen in "July or August" — the demand to visit theaters will be at a high.
"After people have been staying in their house, who knows for how long, people are going to want to go to the movies," says Rayburn. "People are going to want to do things. Those are some of the businesses that are going to do really well after this. They're gonna see really good traffic."
The Universal exception
That's not to say the coronavirus isn't challenging the industry to rethink its practices. As theaters close and all of Hollywood takes a short-term financial hit, these "unusual times" call for thinking "outside the box," Dergarabedian says.
Such is the case for one of Disney's competitors, Universal Studios. With some of its new releases, like the CGI animated film Trolls World Tour (due in theaters April 10) and the small-budget horror hit The Invisible Man, which opened prior to the virus worsening outside China and Italy, Universal made these movies available to rent for $20 via on-demand services like iTunes, Amazon, and cable providers.
If this proves successful for Universal, it may be the beginning of the end for theaters.
Dergarabedian says Universal can be nimble precisely because of the movies it had. "It's a case by case basis," he says. "For Trolls, it makes total sense. If school is closing and kids are indoors for their health and safety, you have a movie aimed at kids and families, you kind of have to go with the flow and have it available. The Invisible Man over-performed two weeks ago, so they're not undercutting the theater."
On the flip side, "When you have a film that is extraordinarily expensive, like a superhero film, if you go on streaming and most people see it there, I don’t know how you make back the money that’s already or will be spent when those movies have a global, theatrical release." That's why Universal's biggest movie of the season, Fast & Furious 9, remains delayed for eleven months and will not release through on-demand with Trolls World Tour.
"Will this affect the short term box office? Naturally, it will," Dergarabedian says.
But it's the long-term, specifically how these movies may open in 2021's already established theatrical calendar — with movies like The Batman, Jurassic World: Dominion, the Avatar sequel, and Marvel films like Shang-Chi and the Legend of the Ten Rings — that is the biggest unknown.
Should movies like Fast & Furious 9 and Mulan crowd 2021, then "next year is going to be stacked. This impacts a lot of other movies on the release calendar and consumer behavior."
For now, as moviegoers stay inside and stream or rent movies for $20, it's unlikely the biggest tentpole movies from Disney or any other studios will skip theaters. Smaller movies might, though.
"No one is going to look askance at any entity moving a release date," Dergarabedian says. "They have to do what’s best for the movie, what’s best for the consumer, and of course employees as well. Audiences will follow movies wherever they go."
Both analysts anticipate big crowds at theaters when the pandemic dies down, suggesting that studios taking a hit now could make up for it in the end.
"Once the big screen is available, people are going to have that experience just because it’s something we’ve done since the beginning of cinema," Dergarabedian says. "The theater is a way to escape. In time those things will come back."