Media the Verge magazine said that although Universal Pictures’ “Wonder Craft 2” skipped the theater five months ago to choose to premiere on the web, No one would think Disney would put its live-action film “Flower Magnolia” on the network channel. However, it turns out that everyone’s idea is wrong. The film, which is thought to be disney’s biggest hit this year, has been announced for release on Disney Plus.
Viewers will have to pay an additional $30 to unlock the film in addition to being a disney plus subscriber. In fact, Disney has created a video-on-demand portal on its own streaming platform, which has generated 100 percent of the company’s revenue, 100 percent control over how users watch movies, and 100 percent of user data.
“We’re very excited to bring “Flower Magnolia” to our consumers, who have been waiting a long time, and unfortunately we have had to postpone the release date several times before,” Disney CEO Bob Chapek said on a earnings conference call. “
Before the new crown, “Flower Magnolia” could gross more than $1 billion at the box office. Now, moving the film to Disney Plus is a fundamental shift for the entertainment industry. While Chapek told analysts that Disney’s move was a one-off, according to a Disney source, the behind-the-scenes work they put into it is definitely not just about one movie. In fact, Chapek, referring to the new release model for Magnolia, stressed that the Disney team was interested in “seeing what happens,” including the growth in subscriptions and the number of people who bought the film.
As can be seen from the lines, Chapek doesn’t want to annoy the Association of Theater Owners, but he doesn’t want to overlook the possibility that Disney Plus can do more. It is clearly foolish to ignore an obvious new source of income, especially in the context of the current pandemic, when businesses have to face continued economic turmoil and may continue at the end of the pandemic.
I’m sure no one would have thought that this new crown pandemic would last so long. Five months ago the entertainment industry was completely different.
While the sudden shift in strategy of the world’s three largest studios – Universal, Warner Bros. and Disney – is to blame for the pandemic, the results seem inevitable. Home entertainment revenue swelled last year, driven mainly by different types of streaming options. The pandemic has accelerated a trend that could emerge in the next few years — what could happen within a decade would happen within a few months of this health event. Disney’s approach raises questions: Can cinemas survive? Will studios prioritize digital distribution as big businesstries try to build their own streaming base?
Cinemas are not dead, and studios are still hoping to show their blockbusters in theaters, like Christopher Nolan’s new film Creed. Looking ahead, however, the companies also want to get into the home as soon as possible, bringing users into their own streaming platforms or digital rental spaces, where studios can get a bigger share of revenue. This is basic capitalism: studios want any source of income.
Take a look at other initiatives taken by the major studios. Universal Pictures has reached a new agreement with AMC Cinemas to shorten the window of the theater — the time the film will be released in the theater. Universal Pictures can now put movies on platforms like iTunes or Amazon in 17 days, not weeks. Other studios, such as Warner Bros., are turning some of their films into exclusive digital rights, while Paramount and Sony have sold some of them to Netflix and Amazon.
No media outlet has ever said that Disney will move “Flower Magnolia” and “Black Widow” to Disney Plus because cinemas are too important to studios. Still. Last year, Disney made $13.2 billion, nearly 30 percent of the $42.5 billion in global movie revenue. In an interview in February, co-chairman Alan Horn told The Hollywood Reporter that theater releases would still be a huge profit for Disney, which is necessary because of the high cost of making films. That’s why Disney didn’t put “Flower Magnolia” on Disney Plus.
Although this is not the death of the cinema, it is proof of the rapid collapse of cinema windows. According to statistics, half of the industry’s $42.5 billion in box office revenue comes from three studios: Disney, Warner Bros. and Universal Pictures. This gives studios more power to make certain demands. These requirements are likely to be shorter windows – studios will want to move movies out of theaters earlier than before and move them to online platforms that are directly to consumers, where they can earn 80 to 100 percent of their revenue.
The big question now is how powerful Disney and other studios are combined. Disney’s release of “Flower Magnolia” hints that the blockbuster may be released on the same day as Disney Plus and major theaters. Obviously cinemas don’t want that. In television, differences between content providers and distributors often lead to “transportation disputes” — that cable providers like Verizon lose access to a network because of contract negotiations. Content providers tend to prevail in transportation disputes, and of course, studios want to show them in theaters, which also need films from studios.
After the early stages of the pandemic, the blockbusters will still be shown in cinemas. Films like “Avengers: The Final Battle” leave theaters in two weeks or even two months. As long as it attracts audiences, studios will keep their top-grossing blockbusters in theaters.
The biggest change, to say, will be mid-budget movies that won’t bring in $750 million or even $1 billion at the box office. The films may be shown for two weeks and then transferred to streaming platforms, which then drive people to use their streaming services.
This is a business model that has never really been tried. Although in many ways, it’s reminiscent of the Hollywood model of decades ago, when studios owned cinemas and had more control over their distribution. This changed in 1948. For more than 70 years, studios have been banned from owning cinemas, and during that time the film industry has changed radically. No one really knows how things are going. As the biggest film to premiere directly on streaming media, “Flower Magnolia” will be an important signal in other areas of the film industry.
Disney now has several distribution sourcing sourcings: directly in Disney Plus, then bringing it to Disney Plus after a period of time in theaters, simultaneous distribution in cinemas and Disney Plus, and only in cinemas.