Column: What Mulan Could Mean for Disney+ and the Future of Movie Distribution

Kelly O'Grady
Kelly O'Grady is dot.LA's chief host & correspondent. Kelly serves as dot.LA's on-air talent, and is responsible for designing and executing all video efforts. A former management consultant for McKinsey, and TV reporter for NESN, she also served on Disney's Corporate Strategy team, focusing on M&A and the company's direct-to-consumer streaming efforts. Kelly holds a bachelor's degree from Harvard College and an MBA from Harvard Business School. A Boston native, Kelly spent a year as Miss Massachusetts USA, and can be found supporting her beloved Patriots every Sunday come football season.
Column: What Mulan Could Mean for Disney+ and the Future of Movie Distribution

Looking for something to do this holiday weekend? Grab the (microwaved) popcorn and 'let's get down to business.'

Disney is releasing its live-action remake "Mulan" on Disney+, with potentially groundbreaking implications for how tentpole films are usually released.

If you're a Disney+ subscriber, you can gain exclusive access — but you will have to pay $29.99 on top of the monthly subscription fee. To purchase, head to your Disney+ app on Apple, Roku and Google platforms or to Disney+'s website. You'll retain the film for as long as you remain a Disney+ subscriber. But if you're planning to catch "Mulan" when it's added to the general Disney+ library, you'll have to wait until December 4th.

I worked as a senior analyst at Disney when it was just beginning to devise how to bring its content direct-to-consumer. This is another shrewd business experiment for the media giant to test out a little disruptive distribution. Streaming has become a core part of its strategy as the pandemic wreaks havoc across traditional revenue streams. And as many users hop between streaming services, the "Mulan" release may give Disney+ a well-timed incentive to keep customers from cancelling subscriptions while they await the next season of "The Mandalorian." Giving its users sustained access to one of 2020's only films — and a key addition to its princess franchise at that— could give Disney+ a stickiness advantage over its competitors.

So how should you evaluate whether Mulan's release is a success?


The New Economics of the Release

Let's consider the pure revenue economics of the film. From the outset, the potential audience pool is smaller compared to a wide theater release. By limiting purchases to Disney+ subscribers, you eliminate the prospect of reaching every individual that has access to a theater. And while not everyone frequents theaters regularly, the number is certainly higher than the service's subscriber base.

"Mulan"'s debut may incentivize new Disney+ sign ups though, adding to an already hefty base of around 60 million subscribers. Now, "Mulan" is the first Disney live-action remake to receive a PG-13 rating for "sequences of violence" — something which may deter parents from picking it for family movie night — but that could be counterbalanced if the movie can draw in the young male demo, where strong female-led films tend to struggle.

These recent live-action films have grossed anywhere from around $400M to $1.7B worldwide. A key caveat to remember is that on Disney+ entire families will watch "Mulan" together, rather than purchasing a separate ticket for each viewer at the theater (families, this is actually a steal for you). So if we assume "Mulan" measures up against its peers creatively, roughly a quarter of those 60M subscribers would have to pay $29.99 to compete on the low-end performance of ~$400M. And to pass the coveted $1B mark? Over 50% of Disney+ users would need to purchase access.

Now, this back-of-the-envelope math solely considers Disney+ and does not take into account that "Mulan" will receive a traditional release in countries where cinemas are open and Disney+ is not available — like China. Regardless, the Disney+ release will have to convert a significant portion of its base to bring in as much as a traditional theatrical release — albeit a base of proclaimed Disney fans.

Streaming Subscriptions

The complicating factor is that a dollar spent with the streaming platform is more valuable to Disney than one spent at the theater. With a traditional release, cinema distributors take about 40-50% of box office revenue over a film's run, whereas an Apple or Google will only take 30%. And if a subscriber purchases directly via the Disney+ website, Disney keeps 100%… not to mention the increased revenue from potential new signups. It is an intriguing nuance that will certainly impact Disney's evaluation of future release strategies.

Business Unit Monetization

The other key aspect is the business unit halo effect. What makes Disney special is its franchise monetization engine. Although difficult to quantify, Disney evaluates how intellectual property can be leveraged beyond a film, into merchandise, experiences, and spin-offs. Social distancing has revealed where that engine is vulnerable. Disney won't be able to repeatedly engage fans on a theme park ride or at retail stores, which could make it difficult to build a strong franchise. The Disney+ release will not address those challenges. Further, downstream revenue from DVD and digital sales will suffer from this move. There is no need to buy another copy of "Mulan" when your purchase lives in your Disney+ app.

Branding and Data

There is significant upside to be captured, though. When subscribers can rewatch "Mulan" whenever they like, it makes it much easier and faster for Disney to create a legion of superfans and to build brand affinity. Further, the direct access to "Mulan" purchasers' data is invaluable — something impossible to capture for theatergoers. When the pandemic does pass, Disney will have a more sophisticated understanding of its fans and can use that to better engage consumers across its businesses. They will know you're not only a "Mulan" fan, but that your family also frequently watches "Frozen"; don't be surprised if you get a targeted invite to hang with Olaf at the parks.

With all these dynamics at play, how the "Mulan" experiment turns out will have important repercussions not just for Disney, but Hollywood in general. While I doubt the movie's success or lack thereof will completely overhaul the way movies are currently released, I think that we will see lasting changes, from the way studios experiment with a variety of distribution methods to a reduction of the length of time movies stay in theaters.

Different studios are likely to have different strategies for each of their films, but the belief that a tentpole movie needs to start with a theatrical release is about to be tested.

___

Kelly O'Grady heads up video for dot.LA and serves as chief host & correspondent. You can watch her speak about Disney here. Find her on Instagram @kfogrady and email her at kelly@dot.LA.

https://www.instagram.com/kfogrady/
https://www.linkedin.com/in/kelly-o-grady-61714248/
kelly@dot.la

Subscribe to our newsletter to catch every headline.

Starships Were Meant To Fly: Astrolab's New Jeep-Sized Rover Gets a Lift from SpaceX

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
Starships Were Meant To Fly: Astrolab's New Jeep-Sized Rover Gets a Lift from SpaceX
Photo by Samson Amore

Local Los Angeles-area startup Astrolab Inc. has designed a new lunar vehicle called FLEX, short for Flexible Logistics and Exploration Rover. About the size of a Jeep Wrangler, FLEX is designed to move cargo around the surface of the moon on assignment. It’s a bit larger than NASA’s Mars rovers, like Perseverance, but as it’s designed for transport and mobility rather than precision measurement, it can travel much faster, at speeds of up to 15 miles per hour across the lunar surface.

In the short-term, this “cargo” would be mostly scientific equipment, but down the road, it’s possible that FLEX could also contribute to larger-scale projects, such as building out a “lunar infrastructure.” Astrolab founder Jaret Matthews told The New York Times that his goal, ultimately, would be to serve as a kind of “UPS for the moon,” providing a “local distribution solution” once private companies had figured out the logistical challenge of getting their products to the lunar surface in the first place.

To that point, Astrolab plans to get FLEX itself on to the moon with help from SpaceX. Specifically, the company’s new giant spacecraft, Starship, which will reportedly be ready for uncrewed lunar cargo missions as soon as 2026. Matthews – an engineer by trade, and a veteran of both SpaceX and NASA’s Jet Propulsion Laboratory – assured the Times that FLEX will be part of the very first SpaceX commercial cargo flight to the moon. For their part, SpaceX has not yet made any specific announcements about when this might actually be happening, and didn't respond to requests for comment.

Starship is the largest and most powerful rocket ever built, surpassing even NASA’s own Saturn V and Space Launch System. It’s unconventional in a few other ways as well. Starship is constructed from stainless steel, the first time this particular metal has been used in a space rocket since the 1950s. Steel is heavy, so launching a steel rocket into orbit requires more fuel than alternate metals such as aluminum or titanium. Nonetheless, SpaceX prefers steel as it apparently works better in extreme temperature conditions, such as during launch and atmospheric re-entry. The use of stainless steel also gives Starship a distinct, rather stylish silver appearance.

SpaceX’s plans for the Starship megarocket lie not just in its massive size but reusability. Being able to launch heavy payloads into orbit and beyond without having to construct an enormous new rocket each time significantly lowers costs, and gives SpaceX a potential leg-up in terms of transporting satellites and spacecraft, along with cargo and even passengers on space tourism getaways.

The vehicle has flown a few times before, but only low-powered versions on quick roughly 6-mile trips above the Earth’s surface. SpaceX had hoped to launch some early orbital tests in 2022 but faced numerous delays. The new goal – pending FAA approval – is to get orbital tests going in late April, which founder and CEO Elon Musk predicts have about a 50% chance of success. (Yes, this could potentially include one of Musk’s personal favorite dates in the annual calendar: 4/20.)

Once FLEX arrives, it will actually rank among the first-ever American-made rovers to hit the lunar surface. Though NASA previously sent a famed “moon buggy” up there which astronauts used during the Apollo 15, 16, and 17 missions, and both the Soviet Union and China have deployed robotic rovers, the US has previously preferred to do its moon exploration in person. That’s all about to change, though, with not only FLEX’s debut, but NASA’s Volatiles Investigating Polar Exploration Rover, or VIPER. This rover, about the size of a golf cart, will explore the area around the Moon’s South Pole looking for water ice ahead of the arrival of the Artemis Program – and human astronauts – in 2025.

Astrolab isn’t the only local company hoping to leverage SpaceX’s Starship plans for its own purposes. K2 Space, founded by brothers Karan and Neel Kunjur, are developing large-scale “satellite buses,” physical structures that can move and power entire spacecraft, which are about as large as any objects humans have ever attempted to blast into space. While previous efforts to innovate space travel on the commercial side have focused on making vehicles smaller, and thus cheaper to launch, K2 views the progress of SpaceX as a sea change, indicating that – one day soon – manufacturers will have a variety of “launch providers” for getting their products on to the moon and beyond.

Meet the Creator Economy’s Version of LinkedIn

Kristin Snyder

Kristin Snyder is dot.LA's 2022/23 Editorial Fellow. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.

Meet the Creator Economy’s Version of LinkedIn
Creatorland

This is the web version of dot.LA’s daily newsletter. Sign up to get the latest news on Southern California’s tech, startup and venture capital scene.

LinkedIn hasn’t caught on with Gen Z—in fact, 96% rarely use their existing account.

Considering 25% of young people want to be full-time content creators and most influencers aren’t active on LinkedIn, traditional networking sites aren’t likely to meet these needs.

Enter CreatorLand.

Read moreShow less
https://twitter.com/ksnyder_db

This Week in ‘Raises’: Total Network Services Gains $9M, Autio Secures $5.9M

Decerry Donato

Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.

This Week in ‘Raises’: Total Network Services Gains $9M, Autio Secures $5.9M
This Week in ‘Raises’:

It has been a slow week in funding, but a local decentralized computing network managed to land $9 million to accelerate deployment of its new product called Universal Communication Identifier (UCID™). Another local company that secured capital included Kevin Costner’s location-based audio storytelling platform and the funding will go toward expanding the app’s content library and expanding into additional regions in the United States.

Read moreShow less
RELATEDEDITOR'S PICKS
LA TECH JOBS
interchangeLA
Trending