Mulan is Hollywood’s Biggest Experiment of 2020

I was surprised to learn that Disney is making Mulan available on Disney+ as a $30 premium rental. I had been assuming that it would eventually be pushed to 2021 and have a traditional theatrical run.

So why not wait until next year? A dollar today is worth more than a dollar tomorrow, and with theaters and theme parks closed (or open at reduced capacity), Disney is in desperate need of dollars. Also, it’s impossible to know exactly when moviegoers will return to box offices in full force given the uncertainty of a coronavirus vaccine and how long it will take for the public to feel comfortable congregating in crowds again.

Of course several other movies have been released as premium rentals (e.g. Trolls World Tour and The King of Staten Island) or directly to streaming services (e.g. Hamilton, Greyhound and Palm Springs), but none of these had the potential to reach a billion dollars like Mulan does.

So Disney is going to charge $30 for Mulan as opposed to $20 like other premium rentals. The studios have been tempted to charge higher prices for films with higher budgets at theaters in the past, but never tried, so this higher price is another component of the Mulan experiment.

Releasing the rental through Disney+ is also unusual. Typically digital movie rentals are offered through Apple TV and Prime Video where the studios give the store operators a roughly 20% cut. Disney is instead offering Mulan as a rental inside of Disney+ where it can keep 100% of the revenue. This way Disney cuts out not just AMC and Regal but Apple and Amazon as well, which makes sense given the fact that they are competitors now in the streaming wars.

If it works Disney may follow suit with Black Widow and Soul, then WarnerMedia and Universal will follow suit with their own blockbusters, giving the studios full control over distributing their content and owning their relationship with consumers.

Do theaters still exist in this scenario? I hope so, but perhaps more as a niche experience and not the exclusive way to see first run movies. Unfortunately this would mean that many theaters, particularly those outside of major metropolitan areas, would see reduced business and likely close.

But whether or not this new reality for movies comes to pass depends largely on Disney’s success offering Mulan to consumers directly next month.