The release of “Raya and the Last Dragon” on March 5 is Disney’s first try at a simultaneous theatrical and streaming debut in the U.S. and selected territories where Disney+ is available.
But unlike Warner Bros., whose entire 2021 slate will stream on HBO Max at no extra charge, those already paying for Disney+ to watch “Raya” must pay the same $30 “Premier Access” fee applied to the Sept. 2020 release of “Mulan,” which was kept out of U.S. theaters due to the pandemic.
This is another bold bet for Disney, but the company has valid reasons to test the surcharge and potentially use it for future films.
Disney+ Has Grown Remarkably, But U.S. Is Still Its Biggest Market
The “Mulan” release is said to have earned Disney around $90 million in its first two weeks on Disney+ via the surcharge but failed to bring in the number of subscribers the company wanted, per The Information.
However, Disney+ now boasts 95 million global subscribers, with the vast bulk of subs split between the U.S. and India, as Europe and Latin America account for less than a third of worldwide subs.
Even then, Indian sign-ups account for around $0.70 per every $5 from U.S. sign-ups, per The Information’s calculations.
Maximizing U.S. revenue is therefore pivotal for the financial health of Disney’s streaming division as it seeks to gain more prominence across Europe via foreign originals in order to better generate revenue from a region where Netflix already has a firm international presence.
While Pixar’s “Soul” did quite well on Disney+ as the most streamed film on SVODs in December, the substantial increase in subs seen over the last few months should make it worthwhile to test the surcharge again for a studio film, especially since “Raya” is a new IP from less-lauded Disney Animation Studios that doesn’t have the same degree of hype as the studio’s more well known properties.
This will allow Disney to assess the worth of a streaming surcharge at least once more before committing to a unilateral approach for its film studio’s titles in 2021 as WarnerMedia, NBCUniversal and ViacomCBS have with theirs.
Adopting Warner Bros.’ Model Would Weaken Box Office Performance
As the first Warner Bros. title to hit HBO Max and theaters at the same time, “Wonder Woman 1984” has failed to pass $50 million at the domestic box office two months after its Dec. 25 release, as opposed to the $58 million nabbed by “Tenet,” which had a Sept. 3 release exclusive to cinemas.
If the sequel to “Wonder Woman,” a film that grossed $100 million domestically in its opening weekend, can’t make as much as the standalone, non-superhero “Tenet” when it’s made available to watch with a streaming subscription at no extra cost, Disney has taken note.
Warner Bros. must bear this brunt of box office loss, as WarnerMedia has a vast need to boost HBO Max given that only 17 million of 38 million subs have activated its streaming app, a stark contrast to how well Disney+ is doing.
Still, “Tom and Jerry,” which hit theaters and SVOD Feb. 26, had a surprisingly good opening weekend, already surpassing each of the cumulative grosses earned by the other two Warner Bros. films released in 2021.
On top of that, the recent news of NYC getting the go-ahead to reopen cinemas means a top theatrical market will be available again for Disney films, albeit under the constraints of a 25% capacity limit.
Since COVID cases are likely to persist into 2022, it’s reasonable to expect more studio films from Disney will get streaming releases alongside theatrical runs. CEO Bob Chapek reiterated during yesterday’s Morgan Stanley Q&A that “Premier Access” on Disney+ is a tentative strategy in light of COVID and that the company doesn’t want to “cut the legs off” theatrical runs.
Continuing to send select studio titles to Disney+ with a surcharge may be the necessary compromise needed to keep revenue up without completely tarnishing box office performance at a time when the box office could finally be making a slow return to normal.
Disney+ Has Marvel Might to Flex in 2021 Thanks to Series, Not Films
There are currently three Marvel Cinematic Universe films scheduled to hit theaters in 2021, noted in red in the chart below.
While having the ability to stream new MCU films for free would be a major selling point for potential Disney+ subscribers, long-anticipated MCU original series have begun streaming on the service.
“WandaVision” wraps its debut season Friday on Disney+ and was the most viewed title across SVODs in January, per TVision estimates.
The first of five MCU shows scheduled or expected for Disney+ in 2021, “WandaVision” also ended Disney’s MCU hiatus following the record-breaking domination of “Avengers: Endgame” at the box office in 2019.
Many of these series feature A-list actors reprising their characters from MCU films, therefore comprising massive incentive for Marvel enthusiasts to subscribe to Disney+.
While the chances of “Black Widow” debuting on Disney+ may be slim following remarks from Chapek in February, “Shang-Chi” and “Eternals” are new MCU entrants that aren’t led by familiar characters.
With Disney+ finally able to air series it has promised since before it even had a name, maintaining a surcharge for studio films that get streaming releases won’t slow the service’s continuous ascent up the SVOD ladder, nor remove all incentive for moviegoers to see those films in theaters, should they choose that risk.
Rather, the availability of these films to stream with an asterisk will simply complement what Disney+ sold itself on being in the first place.
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