The Mulan Strategy

Disney’s new streaming release strategy puts the company at odds with consumers and movie theaters. But is it a sound business move?

Disney is in the midst of a PR snafu with its latest film, and despite everything, it’s all due to a misunderstanding of the Mouse’s money making methods.

After months of rescheduling due to Covid-19, Disney’s readaptation of Mulan was finally released to the public on the 4th of September. However, there’s an issue. After multiple delays for the theatrical release date the film ultimately made its way onto living room screens via Disney’s streaming platform Disney Plus. The film is available for immediate download to subscribers – but only if they’re willing to pay an additional 30 dollars.

Understandably, this upset people. 

On the whole, this maneuver has generated two central complaints [1]. The first, and most obvious one, is that this is outrageously expensive. A conventional cinema ticket costs far less, and gets you additional services such as a big screen and an air-conditioned locale. This in turn leads into a sub-complaint, specifically because releasing a major motion picture directly to streaming when it was slated for a theatrical release seems like an attempt to cut out movie theaters, something born out of base greed at the expense of an industry that helped Disney become so great in the first place.

The second complaint is, again, about price, but in a different way. Subscribers are upset at the additional fee incurred despite their ongoing payment to the streaming service. As such, an offer that was supposed to be fairly all inclusive is now capped in obnoxious ways.

These two complaints are contradictory : if the model is a major financial outrage, people won’t support it monetarily, and Disney will view the strategy as not profitable, and will abandon it. On the other hand, if the strategy is so dangerous for theaters, then peoples’ relative revulsion with the movie is counterproductive; clients are alienated by a project intended to cater to them. What, given the above, is actually going on?

Disney in Trouble

Disney is huge, which is not the same thing as being invincible, and 2020 thus far has been incredibly destructive for them. Disney stock prices plummeted to their lowest selling point since 2016 in March (though prices have since recovered), and the company reported $4.7 billion in losses in Q2 [2]. The loss of Disneyland and Disneyworld related revenue, combined with the ongoing inability to profit from new films, have hammered the company.

Disney’s move with Mulan shouldn’t be viewed as an attempt to instigate a new paradigm; indeed, just breaking even on a film like Mulan would require a ludicrous number of purchases. And while there are users who are excited about the financial advantages of a digital release for Mulan (this is the case in particular for families with smaller children, the only demographic likely to see any form of advantage in the model), most seem to be at best indifferent and at worst outright hostile to it. Worse yet, Disney’s decision to release the film to their subscriber base free of charge on the 4th of December [3] undercuts the likelihood of breaking even, because it encourages viewers to wait instead of paying the price of three tickets to see it in advance.

But again, Disney is huge, and has a considerable war chest. This means it can afford a few months of unprofitability, so long as  this serves its long term goals. Those months would be worth the expense so long as they afford Disney a better foothold in the streaming market and a handle on its PR.

The Streaming Market

Disney’s CEO, Bob Chapek, suggested in recent commentaries to the press that the Mulan strategy was a one-off move to offset the situation in relation to the global pandemic. This is an encouraging sign for those who fear that streaming will soon supplant theaters (though, clearly, movie theaters are currently facing an even broader set of problems). 

However, this recent move with Mulan does align with other tactics used by Disney during the pandemic, namely the release of Hamilton exclusively to confirmed Disney Plus (Disney’s fairly novel streaming service) subscribers; this prevented anyone from watching the musical (which is not legally available elsewhere on the internet) if they only had a free trial. 

Disney Plus has had a comparatively strong start, racking up 60 million subscribers by August [4], but is faced with stiff competition in the streaming wars. Disney is attempting to consolidate a notoriously flighty and disgruntled user base [5]; in other words, to reduce “churn” [6]. This is consistent with the difficulties encountered after the conclusion of the Mandalorian, when users abandoned the platform en masse.

As exclusivity contracts push streaming platforms to divvy up a pool of increasingly cash-strapped and reluctant users, reducing churn is the name of the game. A single good exclusivity can bring a user to the platform for a short time, but the profitability of streaming platforms resides in the most durable audience. Disney’s greatest weakness in that regard has been a lack of original exclusive content, something that its competitors (specifically Netflix) excel at. Mulan, as a totally new release (though a remake) caters to that particular niche; the same is true of Artemis Fowl (another exclusive release) as well as  Hamilton. Disney is using these opportunities to attempt to lock in its user base.

A Fighting Retreat 

As Mr. Chapek stated, this is a strategy born of exceptional circumstances: without the pandemic, both Mulan and Artemis Fowl were intended for wide release in theaters. Indeed, Disney’s decision to make The Rise of Skywalker available in advance was part of the same line of thought: create and release content for the streaming platform while demand is high and alternative means of release are unavailable.

Mulan, however, is not the best standard bearer for a strategy like this. The first responses from critics are in, and it seems Mulan is suffering from the same issues that plagued other live-action remakes: it seems unnecessary because [7] of the existence of its predecessor [8]. This is especially damaging for Mulan, which doesn’t have the added benefit of a cinematic release and a theatrical setting to stand out; instead, it can be viewed alongside the 1998 animated version on the small screen, inviting comparison. None of the above is doing anything to justify the unprecedented $30 price tag.

Secondly, Mulan is at the heart of an ongoing scandal in relation to the Free Hong Kong Movement. Last year, during the height of the Hong Kong Protests, Mulan’s leading actress Liu Yifei expressed support for the Hong Kong police. The controversy this generated has been ongoing ever since, and some fans are currently calling for a boycott of the film [9]. A small mercy for Disney is that this story has had to share oxygen with the $30 price tag; there’s only so much flak they can take at the same time. On the other hand, this is playing very well in mainland China. However, this is of comparatively little use to Disney, seeing as Disney Plus isn’t available in mainland China.

What, then, to make of this? When all is said and done, this isn’t the move of a corporation in a position of strength, nor is it an industry shift in the way that movies are made or distributed; it’s a stopgap measure aiming to turn a freefall into a controlled descent [10]. And it’s also clear that Disney is trying to make due with what’s on hand; this sort of maneuver would have worked much better with a film that wasn’t under international scrutiny due to ongoing China-related controversy (which is also something that they’re attempting to avoid).

There are certainly adequate moments to point out Disney’s unbridled greed (and we’ve covered some such moments) [11]. Today, however, it’s more important to keep an eye on what will change and what won’t. And if Mulan proves one thing, it’s that we can rely on Disney to come back to that which brings it success.

Which of course means that we’ll see you in theaters for another decade of Marvel films. 

Sources:
1. Nicole Lee Pesce, “$30 to watch ‘Mulan’ on Disney+ right now is either outrageous or an amazing deal, depending on who you ask”, Marketwach, September 5 2020
2. R. T. Watson, “Disney Earnings Report Reveals Rare Loss”, The Wall Street Journal, August 4 2020
3. Julia Alexander, “Mulan will be available to all Disney Plus subscribers for no extra fee on December 4th”, The Verge, September 2 2020
4. Diane Haithman, “Pandemic Pounds Results for Disney, Other Media Giants”, Los Angeles Business Journal, August 10 2020
5. Ryan Ogilvie, “Fans Cancel Disney+ After Season 1 of “The Mandalorian” Ends”, Inside The Magic, December 30 2019
6. Julia Alexander, “How much will it actually cost to watch Mulan on Disney Plus?”, The Verge, August 12 2020
7. Alison Willmore, “Mulan Is a Dour Drag of a Movie (But a Fascinating Cultural Object)”, The Vulture, September 4 2020
8. Kevin Slane, “What critics have to say about ‘Mulan’”, Boston.com, September 4 2020
9. Adela Suliman, “Disney’s ‘Mulan’ faces boycott calls from activists in Hong Kong, Taiwan and Thailand”, NBC News, September 5 2020
10. Julia Alexander, “Streaming remains lone bright spot as Disney prepares for an unprecedented fight”, The Verge, May 5 2020
11. Shane McLorrain, “A Game of Cash and Mouse”, Zeitgeist Zeitung, August 23 2019

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