Disney’s Mulan tests the direct-to-digital theatrical paradigm

With the pandemic continuing to limit public events, Hollywood studios have been forced to contemplate exactly how to maximize revenue for their film releases. Do they opt for physical movie theaters with limits on attendance and thin ticket sales? Or, do they choose to go all in on digital distribution while charging a premium fee for viewers at home?

Companies like NBCUniversal and Disney are experimenting with premium digital releases. NBCUniversal decided to offer all its theatrical releases for premium rental at $20 apiece, and its kids animated film Trolls World Tour generated $100 million after three weeks. Disney also launched its Mulan remake on Disney+ for $30 on September 4th. Internationally, Mulan’s box office receipts have totaled around $38 million, while digital sales have come in at more than $33 million, according to Samba TV. The $30 premium fee is certainly expensive compared to typical digital rental fees of $5 to $7 per film, but considering the price of in-person movie tickets, it may be considered a good value for some families.

Christopher Nolan’s Tenet, meanwhile, shows us the other side of the Hollywood conundrum.  The thinking was that Nolan’s blockbuster could help save theaters amid the pandemic, and while it’s grossed over $200 million globally, the movie garnered less than $30 million in the US, “a number so low that it’s scaring other major movies off the release schedule,” according to The Atlantic.

Studios are between a rock and a hard place in the US, but Interpret’s New Media Measure® does point to an increase in interest for the digital market. Year-over-year, prior to Mulan’s release, we’ve seen a 2%-point bump in US consumers who are purchasing or renting movies digitally, which represents annual growth of more than 6 million viewers – nothing to sneeze at. The key to success in the digital marketplace will be to find the right balance between price and value for the consumer.

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