Disney (DIS) Movies to Hit Theaters Before Streaming

Company plans theater-first distribution strategy for year's remaining releases

The Walt Disney Company (DIS) plans to release its remaining slate of 2021 movies in theaters before showing them on its streaming platform Disney Plus, the company has announced. The entertainment behemoth's latest decision is a contrast to the previous day-and-date release in theatres and on its streaming platform for Black Widow, a high-profile summer release from the Marvel Cinematic Universe (MCU) that had this year's biggest opening weekend box office collections.

"Following the tremendous box office success of our summer films which included five of the top eight domestic releases of the year, we are excited to update our theatrical plans for the remainder of 2021," Kareem Daniel, chairman, Disney media & entertainment distribution, stated. In a reference to the theatrical experience, he said "confidence in movie-going continues to improve."

Key Takeaways

  • Disney is planning to release its remaining slate of movies for 2021 in theatres first and streaming later.
  • The strategy is a reversal from the studio's Black Widow experiment, when it released the movie on the same day and date on both platforms.
  • Disney investors have bid up the stock's price based on subcriber gains for Disney Plus - its streaming platform during the pandemic. It will be interesting to see the effect of Disney's decision on its stock price.

Why Did Disney Change its Distribution Strategy?

The change in distribution strategy may have been triggered by the box office performance of Disney's latest release, Shang-Chi and the Legend of Ten Rings. During an earlier earnings call, Disney CEO Bob Chapek referred to the movie as an "interesting experiment." The experiment has been successful, with the lesser-known Marvel franchise grossing $105.9 million in domestic markets through Wednesday of last week. The movie eschewed the simultaneous theater-and-streaming release strategy followed for Black Widow and will only become available on Disney Plus 45 days after its release.

Black Widow had the year's biggest opening weekend. But it witnessed a drastic drop in collections over the second week, inviting backlash from the National Association of Theater Owners (NATO). The group blamed Disney's decision to release the movie on streaming for the fall in collections. (To be fair, the Marvel release was also panned by some critics and audiences).

The movie's lead actor, Scarlett Johansson, also sued Disney, claiming that the drop in box-office revenues hurt her earnings from the movie. In contrast, Shang-Chi has had a relatively controversy-free run. AMC Entertainment Holdings, Inc. (AMC) reported record Labor Day weekend collections, and the movie has received a positive reception from critics.

A Marvel Theatrical Experience

Included in slate of movies pending release in 2021 are several Marvel franchises. According to trade publication Variety, Disney's decision to opt for a theatrical release only for future releases is a "clear win" for Marvel Studios CEO Kevin Fiege.

In the past, Fiege has said that the studio makes its movies for the theatrical experience. "…every time we make a film, it is with the expectation of delivering on a promise of an experience, to be experienced together in a theater. And seeing where people laugh or seeing where people get very quiet and still, or where people cheer if we should be so lucky, in moments in the movie … Every decision we make is from the point of view of sitting in a crowded theater experiencing the story," he told online site Rotten Tomatoes.

Disney Stock: Theaters or Streaming?  

Disney's decision to opt for exclusive theater releases first has implications for its stock price. Exclusive theatrical releases for a limited period guarantee box-office profits and higher margins. But a simultaneous release on streaming channels could pump up subscriber numbers for Disney Plus.

Investors overlooked losses in other Disney divisions and bid up the stock's price during the pandemic, based solely on the subscriber increases in its streaming division. With a reopening of the economy, it will be interesting to see if Disney Plus performance gains hold as much sway on the stock's price gains.

Disney's Media and Entertainment Distribution business had revenues of $12.6 billion in the latest quarter. Marvel Studios, which Disney purchased for $4 billion in 2009, was estimated to have earned over $18 billion at the box office by 2019.

Article Sources

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  2. Variety. Disney releasing 'Eternals' 'Encanto' exclusively in theatres. Accessed Sep. 13, 2021.

  3. National Review. Bland Widow. Accessed Sep. 13, 2021.

  4. Wall Street Journal. AMC theatres sets US labor day weekend record. Accessed Sep. 13, 2021.

  5. Variety. Disney releasing 'Eternals', 'Encanto' exclusively in theatres. Accessed Sep. 13, 2021.

  6. Rotten Tomatoes. Kevin Fiege breaks down phase 4 of Disney releases. Accessed Sep. 13, 2021.

  7. Business Insider. Disney gains $32 billion in market value after forecasting it will triple Disney Plus subscribers by 2024. Accessed Sep. 13, 2021.

  8. The Walt Disney Company. Q3 FY21 Earnings. Accessed Sep. 13, 2021.

  9. CNBC. Marvel's made more than $18 Billion at the box-office. Accessed Sep. 13, 2021.

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