Attack of the $30 Rental: Why Disney’s Mulan Strategy Just Might Work

After bouncing the release date from March to July and then August — all of which were scuppered by the COVID-19 virus — Disney has finally announced that it’s going to make its live action version of Mulan available on Disney+ on September 4. The caveat: It’ll cost an additional $30 to rent it on top of the usual monthly fee for the service. So not only will you have to pay a really high rental fee for the film, you’ll also have to get Disney’s streaming service to get it.

I think this is super-interesting and might actually work reasonably well. Here are the reasons:

1. This is a family film. Which means that for the people who were going to see it, they were likely to watch it as a family, which means they were going to buy multiple adult and child tickets to it, plus concessions, plus parking, plus possibly dinner beforehand or whatever. Which is to say, the financial investment for a family was already going to be at least $30, or like $50 or even more. A family watching this film is not going to lose money on this rental.

2. It’s an established property. It’s established in two ways: One, it’s a remake of a beloved Disney animated film, and two, it’s part of the Disney “animation-to-live-action” franchise, which includes the billion-dollar remakes of Beauty and the Beast and Aladdin. Mulan comes from the same animation era, i.e., the “Disney Renaissance” which means it’s likely to have the buy in on the same scale as those two films, especially with Millennial parents who love the originals.

3. Disney+ is ready for it. Disney announced the streaming service now has 60 million subscribers, which is a significant number on its own, and also means that Disney+ have a large enough audience base that making this a purchasable on the service has some economic feasibility. If 10 percent of the Disney+ audience rents the film at the $30 purchase point, which is not an unfeasible number, that’s a $180 million gross for Disney. That’s not as much as it might make in the theater (it’s reasonable to think Disney thought it would make in the area of $300 million domestically from the film), but here’s the thing about that:

4. Disney should net almost all of that rental fee. In the US, Disney has to split the box office with the theaters. Disney is known for asking for 60+% of the box office for its big releases (which Mulan assuredly is) in the first few weeks, with the theaters usually getting more of the gross the longer it runs. In later video on demand runs, Disney gives a cut to the service hosting the video. But Disney owns Disney+ outright; it almost certainly doesn’t have to give anyone else a cut of the gross.

Why does this matter? Because it means Disney doesn’t have to make as much money to recoup the cost of the film. Mulan is estimated to have cost $200 million to make, and probably cost between $100 million and $150 million to market. In order for Disney to make back all that money in theatrical distribution, the film would have to make somewhere between $600 million and $800 million globally. But without having to give anyone else a cut, now all Disney has to do is make the cost of the film itself. Which it could quite conceivably do as a $30 rental on Disney+.

(NOTE: I am vastly oversimplifying here because among other things the film is still being released theatrically in countries where theaters are open, and will even show here in the US in some theaters when/if possible; this film is going to have a very complicated back end. But the overriding point is — Disney keeps substantially more of the gross in this model, and needs less money to break even.)

5. Disney is not destroying its ancillary gross avenues. People who don’t want to pay $30 for the rental will probably be able to wait a few months and get Mulan as a standard video-on-demand title, and on Blu-Ray not long after that, and then on Disney+ standard streaming and finally on Starz or whichever movie channel Disney currently has relationships with, and so on. So even if the $30 rental doesn’t pan out, the company has some options to recoup over the medium term that it wouldn’t have (or would have fewer of in any event) if it just put the film out on the Disney+ as part of the standard offerings.

Why didn’t Disney do this with Onward or Artemis Fowl or Hamilton, all of which were meant for theatrical but which ended up on Disney+ as part of the standard service? Excellent questions! With Onward, it was because it was already (barely) in theatrical when the theaters shut down in the US; bad luck there, but it is what it is. With Artemis Fowl, it was because a) it was a movie meant to launch a franchise, not part of a franchise that already existed, so there wasn’t audience buy-in, b) Disney knew it had a turkey on its hands, so it both saved money not promoting it, and didn’t get the black eye of a box office bomb. And with Hamilton, that was a pure play to lure in a different set of subscribers to Disney+ than it might have otherwise, and it worked like a charm; Hamilton’s success is probably a significant reason why Disney+ now has the critical mass to host a Mulan release this way in the first place.

To be clear: Disney’s plan here with Mulan could fail, in which case Disney will take the write-down and chalk it up to experience. But if it doesn’t fail, and in fact hits big (which in this scenario would be $250+ milllion at the $30 rental price), two predictions: Disney tries the same trick with Black Widow in the November(ish) timeframe, and by the end of the year Warner Bros. tries it as well with Wonder Woman 1984, possibly on HBO Max. After family films, superhero films are the next safest bet in the $30 rental scenario.

(Wait, you say, is it a coincidence that all of those films have women in the lead role? Hmmm! Is it a coincidence, indeed!)

I should also be clear that when and if people in the US can safely go back to the theater at the same levels as they did before COVID-19, the $30-rental-instead-of-theatrical-release is going the way of the dodo. This is a “next best thing” strategy as well as an “everyone knows this is the only way to see this now” strategy. Movie studios have a contentious relationship with exhibitors, but there’s still money to be made there, on top of money to be made elsewhere. What is more likely to happen is something that Universal and AMC have already agreed to: a shorter theatrical exhibition window, followed by a high-price rental window (in which exhibitors get a cut), followed by the usual VoD, Blu-Ray, streaming, cable, etc.

We’ll see after September 4 whether Disney looks smart or foolish. But fundamentally I can’t fault their decision to try getting Mulan out this way. There’s only so long you can leave these big movies on the shelf. If it works, Disney will have done very well for itself.

— JS

40 Comments on “Attack of the $30 Rental: Why Disney’s Mulan Strategy Just Might Work”

  1. Their scheme won’t work for some of us. I typically see movies alone, on a weekday when it’s inexpensive. So instead of a $6-8 matinee ticket I’d have to pay $30 to see Mulan. No thank you. Pity that; it’s one of the handful of films this year I was looking forward to, and now I’m probably going to have to wait a few more months.

  2. I wonder whether there has been a significant drop in Disney+ subscribers over the last few days, as people who paid for a month to see Hamilton cancel their subscriptions. That’s what I did, after looking over the offerings there and concluding that I am not at all in their target audience. But Hamilton was well worth the fee, and even more!

  3. Shirley Marquez:

    Sure, but — no offense! — you’re not the primary audience here; you’re the free rider, as it were. Even films that pursue a “four quadrant” strategy are often heavily weighted toward one (or two) quadrants than the others. I suspect Disney knows they’re going to lose single viewers here and baked it in to their calculations. I also suspect they know they’ll get you later (as you suggested), and have factored that in to their “long tail” calculations.

  4. This is a purchase, not a one-time rental, which alters the price calculation. I’d rather have a DVD than a digital copy I have to stay a subscriber for, but as a single senior I would not pay $30 instead of $6 to see any movie.

  5. I’m willing to shell out the $30 for it, knowing that part of that is a bet on getting to see Black Widow (and Wonder Woman and Tenet, assuming Warner Brothers is paying attention) before 2021, which is the very earliest anyone will catch me inside a movie theater.

  6. I think you’ve done a pretty good “I’m a Philosopher, Not an Economist!” read on Disney’s strategy, Scalzi. We’ll have to see how much of it survives contact with the enemy — er, “Disney’s Audience”, but it sounds like the way Disney’s mind is running these days, with a $200M movie they can’t open in their biggest market, and may not be allowed to open in their second-biggest thanks to whatever game of Chicken Trump’s playing with the Chinese Government.

    I also think you’re right that this is the pick of a bad lot of marketing choices.

  7. Sometimes it’s hard to look past the “bad” in “picking the least bad of a list of bad options” but when it’s all they’ve got, it’s what they have to do.

  8. the ridger – It’s not really a purchase, though. It’s an open-ended rental. The difference, as you point out yourself, is that you need to stay a subscriber to Disney+. So it’s a rental that lasts as long as you’re a member, but you don’t get to keep it.

    I don’t know if the $30 price point will last when cinemas become widely and safely open again, but I’m not sure that they ever will, at least not in less populated areas, because they were already a struggling business model before taking the massive COVID hit. But even if they do, then I think that unless this is a major flop, the idea of paying for early access to a movie that will eventually be part of the streaming packet will become mainstream.

  9. This is a new thing, not exactly a rental and not exactly a purchase. Disney has said that you will continue to be able to watch the movie as long as you keep Disney+.

    Of course with all of the digital copies you don’t really own the movie. It is licensed to you and there have been cases where that license went away as did the movie. With the other digital copies you don’t have to keep up a subscription with the studio, that is a new twist on the whole digital copy deal.

  10. I think it won’t fly. Even before COVID-19, theaters were careening toward the buggy/automobile cliff. People were already willing to wait for most films to go to TV, many even before shorter-window streaming options arrived. Except for high-follower series like the latest Marvel or Star Wars movie, getting butts into theater seats had become increasingly difficult. Maybe waiting for a must-see movie would have given a better chance, but I doubt that Mulan is the hill they should have picked to die on.

    I suspect that by the time COVID-19 is under control the audience will have moved on. On a related note, I’ve just put a bunch of well-loved VCR tapes on the give-away pile… some unwatched because I’d already bought the DVDs. Which I’ll probably be unloading soon.

  11. As Eytan and DLM pointed out, what’s new is the “license while you’re a subscriber” tweak. But the cost itself isn’t unprecedented. Hotel VOD has charged that much for pay-per-view movies for years, which has been successful with business travelers who are expensing their stay.

  12. Well, as NOT the looked for audience, I can fell free to say…Disney, you must be kidding. The only movie I would pay $30 to see (not to mention the monthly Disney+ fee) is…wait, let me see…oh yeah, you guessed it. There is NO movie in the history of cinema I would pay $30 for. None.

    Gordon Gekko is now running Disney.

    PS – And yes, stay off my lawn!

  13. As someone who rarely goes to theaters (with or without my family) even in a non-pandemic year and is perfectly happy to wait for a streaming release on platforms to which I subscribe (including Disney+, I might add) or instant rental if I really want, that’s gonna be a big “hell no” from me. Clearly, I am not the target audience in this case, but whatever. Hard pass.

  14. I had just been pondering the cost breakdown (though not with Mulan), and yes, if it’s a movie all four of us would go to (which is a small number, but still), $20-$30 is, while not necessarily a *deal*, is on par with what we would pay, depending on theater and if we’re allowing refreshments. ;) If we’re home, we’ll just crack into the already-purchased popcorn and fizzy (unsweetened) drinks.

  15. Movies are more expensive where I live. A first run movie plus snacks for the three of us would probably push up toward $80. Equivalent snacks at home would be maybe $10.

  16. A fair few members of Disney’s “target audience” are currently, or possibly soon to be, unemployed. Most of the folks in my cohort are being damned careful with their cash, as none of us know when we might be joining those ranks.

    I bought a Disney+ subscription, watched Hamilton and The Mandalorian (and honestly found the short pieces on making it more interesting; the Volume is unsettling and awesome), and then cancelled it. Because like Jim G. @5.55, I’ve got boxes of DVDs that I haven’t looked at in years, no small percentage of which are from Disney properties: with a handful of exceptions, the overwhelming majority of media I’ve consumed in the last 12 years has been of the “Saw it once, that was a fun way to spend a couple of hours/OMG, I put on outside pants for that, I’m good” kind, and even the stuff I liked well enough to purchase a physical copy? There’s new stuff that’s a better fit for the person I am now.

  17. Because of the amount of very bored social media freaks out there, I think it will work. People need something to brag about and this will last them a week or so.

    I also see it from the Disney end. Their parks have really tanked this year and they need to pull them out of the fire. They probably already have a live Mulan spot in the works.

    The people that follow Disney in this will find a tougher road.

  18. Disney is making some assumptions about the quality of my home theater system here. :)

  19. Disney and the other studios are in a real problem.

    It’s fine to say that they should just keep delaying Bond, Tenet, etc. but they have already sunk a lot of money into making them – money they have likely borrowed and are paying interest on. The longer they hold them, the more the costs rise, the harder it becomes to break even…

    At some point they need to release them simply to start earning money against the costs, and so while there will be a lot of people watching Mulan I suspect we may see a bunch of these released one way or another by Christmas.

    (as a side note, another benefit for these movies to come out in the final months of the year – all indications are that everyone but Netflix is going to start running out of new material – with Georgia / Southern California either in lockdown or at the very least having a rampaging Covid I am guessing there aren’t a lot of TV shows / series /movies being shot at the moment).

  20. As someone very interested in seeing this movie (though nowhere near my interest in New Mutants), the $30 fee grinds me. I’m not a family of 4. It’s me and hubs. Maybe my father in law. As it is we usually go to the 1st showing of the day or AMC $5 Tuesday. We get drinks only.

    So, $30 is steep. And if they had done this in July when both school and college were out of session, I might have gotten my daughter & her bff to watch it with us. They are back and they do in person classes as students in the medical field.

    Ok, I’m done.

  21. I was thinking $30 was about right. It means I would save a smidge over tickets for a family of four in the theater (Mulan is the kind of film we would see off-peak time for $7-$9 per ticket). I hadn’t factored in the added cost of Disney+. We either need to find a way to safely have friends over for a watch party or renting Mulan will cost more than seeing it in the theater would have.

    Other factor: I was REALLY looking forward to this one. I haven’t watched any of the other live action remakes, but this one looks like it was done really well. I wasn’t even a huge fan of the original animated Mulan, and the trailer still got me good. I might be willing to blow the extra bucks the way I would to see a film at our local drafthouse theater.

  22. I think it’s kind of a weaselly move on Disney’s part, when they have not had much new content on Disney+ (when I subscribed I was looking forward to the Marvel series that have not yet materialized,) to add something to the service that you have to pay extra for. And I don’t believe them when they say it’s going to be a one-time deal, because of all the extra site programming that will have to be done to allow for single-movie purchases. I’d also be annoyed if I was a parent, who may not be able to afford it, but had it advertised to my kids in the app that I already spent my last money on.

  23. The odd thing is that now and the last few years have been great to rent or buy movies for home viewing. Fifteen years ago I was traveling 48 weeks a year. Home just on weekends.

    Every Friday I would check Amazon. They would have $1 rentals that would automatically download to my TiVo (back then I had Scalzi speed internet so download took a couple of hours). I would get home around 9pm that night and the movie would be waiting for me. I would watch it Friday or Saturday night.

    Rental prices have gone up. Most are around $4 now. But I can often buy the move (ignoring digital copy ownership issues) for around $5. I just have to be patient and wait for it to drop to that price. I do pay higher prices for movies I really want to see now and not wait till later.

    Like the music industry, the motion picture industry is trying to understand the digital world. I haven’t been to a theater in about 13 years. I wanted to go see a new superhero movie and every showing near my home was in 3D. (This was back when I was still traveling a lot, see above.) I get headaches wearing 3D glasses after 15 to 20 minutes. So I didn’t go. A few months later it came out on disc and I bought a copy.

    Disney is running an experiment. I won’t take them up on it. In a few months Mulan will be affordable. In a few more months it will be inexpensive (random Disney sale). One or the other will get me to buy it.

  24. I just think the price is too high. $70/year for a streaming service, fine. Adding $30 for the rental of a specific movie? Nobody has ever paid this much for a movie ticket, so it won’t be bought by anyone who has less than two people watching, and probably not by anyone with less than three.

    For buying, $30 would be fine. For renting? Only people who are planning to pirate it and redistributing it (and people will, obviously). It’s simply not the right price. Some people will pay a fortune to get to something earlier, but I don’t think live-action Mulan is going to be like that.

    So basically it’s priced to be pirated. Not smart. But then Disney just reopened Disneyworld in the middle of the pandemic so they’re not smart…

    Here’s the interesting thing: at a lower price I think they would have gotten away with it and it would have been a successful business model and everyone would have copied the business model, which I think is bad. At this price I think it will fail, and as a result they won’t copy a business model I dislike, which I think is good…

  25. I think this is the best strategy available to Disney at this point in time. Theaters are not reopening anytime soon, and I imagine there are more than enough Mulan fan(atic)s to make it worthwhile.

    Price-wise it makes sense. Where I live, admission+drinks+snacks for 2 people would run you ca. $50. That’s with a membership discount, the theater being within walking distance, having dinner at home beforehand, etc. A family of four would spend no less than $80, possibly even up to $100. If you REALLY HAVE to see this movie, $30 is a more than sensible deal.

    You also save on getting out of the house, finding parking (could cost extra), and dealing with annoying and ill-mannered people/teenagers in the audience.

    I would not pay $30 to see Mulan (at home or in the theater), but I might consider paying $30 for Tenet.

  26. Like others here, I bought Disney+ for one month to see Hamilton, absolutely loved it. And though I intended to watch it at least twice more, that didn’t happen. And I didn’t watch anything else on Disney+. No Mandlebottian, no nuthin’. We don’t turn our TV on much these days. We have no kids, so it’s just me, my wife, and our guest who’s been with us since the end of last year. He didn’t watch Hamilton with my wife and I, no idea if he’d be interested in watching Mulan.

    So let’s see. Having to re-up subscribing to Disney+ is what, another $7? So $37ish for one movie. For two people (excluding Dave as he’s not definite), and excluding dinner as that’s not definite, is we were to catch a matinee, that’s about the equivalent of seeing it in a theater. Which clearly is not possible right now, at least here.

    But honestly? I’m not that interested. Not for $30. I’d rather spend the time watching House of Flying Daggers, or Crouching Tiger, or Red Cliff. I’m sick and tired of Disney, and Hollywood, remaking old material. Full stop. DO SOMETHING ORIGINAL, TAKE A CHANCE!

    Maybe I’ll pick up a copy when it comes out, maybe I’ll wait a year or so after it comes out and get a used copy. Hamilton, on the other hand, I’m buying on day 1 when it comes out.

  27. I don’t really have an issue with them charging $30 for new releases as it’s on your account permanently. The issue I have with it is that it’s tied to you being a subscriber to Disney+.

    I do not like that decision at all.

    If I only have access to the property as a subscriber then I expect to just pay my monthly subscription fee. If you sell me the movie then I expect to be able to access said movie regardless of my current subscription status.

    Decisions by companies to perpetually milk their customer base for things that should be one-time transactions is concerning, and should be against the law.

    No thanks.

  28. Hmm, I’ve never thought about film strategies. Do you think that Disney’s success is more due to the fact that people are eternally excited for Disney films (fool-proof), or their tactics on Disney+ to make sure that the entire family watches? I guess it would be both, as if people NEED to watch the latest Marvel film, they’ll overpay quite a bit, even if it’s only purchasable by renting it.

    Also, once COVID-19 slows down (hopefully), do you think that it would be advantageous for Disney to continue to keep all their content on Disney+, or release via theater (traditionally)? Is the movie theater industry doomed, even if COVID magically disappears?

    Sorry if I’m going a bit overboard with the questions here.

  29. I don’t like this strategy as a married individual with no kids. For my wife and I to see Mulan in theaters, it would be say $20ish bucks all together. $30 for a one time rental seems to steep to me when I could essentially purchase the Blu-Ray copy for that price. I get Disney is trying to make some money here but judging on how many folks signed up for Disney + (which I also subscribe to), I don’t think they need to be in a rush to release Mulan. Release the film in theaters when it is safe to do so. That will give us something to look forward to.

  30. This all makes perfect sense – Disney definitely chose the most sensible of an array of bad options here.

    What I’m wondering is if, as a result of this and other films following suit, streaming services will start being more transparent about streaming numbers and cost-revenue with future films and TV shows? Netflix in particular is notorious for spewing out hyperbolic numbers on how many views their newest movie got, but it’s really just their word and nothing more. (Yeah, I know Netflix isn’t doing the pay-extra-for-a-first-run thing yet, but who knows what the future holds.) Now that they are tying this into the revenue the films make directly, I wonder if it’ll be a little more detailed in terms of views and grosses.

    My guess is probably not. Streamers won’t want to release any additional data willingly that doesn’t make them look like smashing successes. But it’ll be interesting to see what effects this has down the road.

  31. I could certainly be wrong, but I think this will be a bust. Not a big one – they’ll make some money – but as others have said, the price is just too high. Sure, you can do the math and see that it may be cheaper than the theater in some circumstances, but a) for the most part, probably only for families of four or more, and b) I don’t think that most consumers will apply a completely objective cost analysis to the situation. There will be a general aversion toward paying $30 for a rental when the going price for any given film on pay-per-view is something like $5.99 or less.

    And then there’s the fact that – especially for families – going to the movies is about more than, you know, the movie. It’s an event. The kids get to pile into the van (perhaps with friends) and go downtown; maybe everyone gets dinner beforehand. They get to sit in a big air-conditioned room with surround-sound audio and experience the movie with a hundred other people, which is part of the fun. The living room offers none of that, and it will be very easy for parents to ask themselves if they can’t just sub in some different family-friendly fare for $25 less.

    The only way I might see it differently would be if Mulan was a massively anticipated, historical blockbuster along the lines of Avengers Endgame or Avatar 2. But then again if it was, I doubt Disney would risk it on this experiment.

  32. I’m very glad they are trying this, because I don’t think people will be going back to movie theraters anytime soon (except in limited situations), and I miss being able to see new movies at all moreso than I miss the movie theater experience.

    As a parent in a family of 3, I’m fine with the $30. Cheaper for us that going to the theater.

  33. I think this will work, for a number of reasons:

    1) As pointed out by many people, a family of 4 or more will pay more than $30 to see a movie in the theatre. Add in snacks and so on, and the cost can easily reach $100 (I had three kids and my family of 5 broke $100 frequently at the theatre). The cost of doing the same event at home even with snacks? Maybe $50.

    2) This was a long awaited release and again as other people have pointed out, part of the existing Disney juggernaut.

    3) COVID quarantine is causing people to need to assuage boredom in new ways. Making an event — even a living room event — of a new movie like this is one way of creating a memory for a birthday or a reward for a child, during a time when most celebrations or get-togethers are out of the question.

    4) If your child is the type to watch a movie over and over, owning it on Disney+ will pay for itself fairly quickly without the complexity of having a DVD to get rid of in a year when same child has moved on.

    5) The biggest issue is obviously having to subscribe to a service you might not use regularly, but I suspect with content like Hamilton and the Mandalorian, plus Marvel movies, Disney+ will have a wider franchise appeal than their previous offerings on cable channels.

  34. The experience part of the theater is why I question this decision. Sure, $30 is about what my family of three would pay for a movie. But we’re paying to see it on a massive screen with surround sound. I’m not going to pay that much to watch it on our dinky TV with its regular TV sound!

  35. The movie theaters are a dodo just waiting to die. I’ll pay 30 bucks, maybe even 40 just to watch at home. This has ZERO to do with Corona and everything to do with the idiots on their phones or bringing their children to a movie.

  36. Something making economic sense for the studio is one thing, and I get that this was the point of your post.

    But can we at least acknowledge that this practice represents yet one more “Screw You!” to those of us who don’t have families to spread the cost across? “You’re not the studio’s target audience” is just another way of saying “Sorry, you don’t get to participate in the general culture because it’s not profitable to include you (unless you can pay for at least three other non-existent people).”

    And I get that the studios are private entities and under no obligation include everyone in the product they provide, and structuring their pricing in a way that eliminates whole demographics instead of raising the price equally for all is absolutely within their rights. But movies have been a huge part of American culture for a century, something available on a fairly egalitarian basis (even if you couldn’t afford to go to the movies every weekend, most people could afford to go once or twice per year). To shrug off the loss of that kind of shared experience of culture as just an economic decision misses a big part of the story.

  37. Historical Note:
    When Walt Disney lost the European market due to World War II, he discovered the Seven-Year Rule: Every seven years, there is a new audience for Disney movies. He needed revenue, so he re-released Snow White and other features.

    Before Disney had a video vault, it had a movie vault, reissuing movies periodically, sometimes with better sound and film quality. That’s how I saw Fantasia and Snow White and about half of the Disney canon in the theater…as reissues. (I’d still pay full price for a ticket if Disney released their classics in theaters.)

    Disney might not make a lot of money NOW, but they will recoup the investment decades from now, as nostalgia encourages adults to rewatch and relive.

    What Disney is doing with Mulan is Pay-Per-View via On-Demand, which is kind of brilliant.
    But it is not different than the pay-per-view that costs extra via my cable provider.
    I would not be surprised if Disney has a sliding price for these movie…a few months later, it’s $10, or $5, just like theaters.

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