The movie theater experience is never complete without purchasing the overpriced, refillable popcorn with a large soda. Unfortunately, with many lawmakers implementing lockdowns in order to stop the spread of COVID-19, no one has been able to enjoy this delicious combination for the past 6 months. The closure of movie theaters across the country has prevented new films from reaching their record-breaking box office potential.
However, just as we have learned to adapt to changing circumstances, Disney (DIS) has found a solution to release films, such as Mulan, as if movie theaters were still open. Mulan was one of Disney’s most highly anticipated films of 2020 but was unable to play in theaters across the country due to lockdowns. Now, Disney plans to offer premier access to watch Mulan, so long as its Disney+ subscribers are willing to pay an extra $30. This premier access plan will last until December 4th, 2020, thereafter Disney+ subscribers will be able to watch the movie for free.
Credit Suisse analysts believe that Disney’s adjusted premium video on demand (PVOD) strategy for releasing new movies has high potential. According to their notes, it is entirely possible for Disney to make the same projected revenue from theaters through Disney+. Analysts predict that if one in six families who currently subscribes to Disney+ purchases the movie, they would achieve box office projections. They believe that continued lock downs will inadvertently result in consumers willing to pay for access to new, premium content.
The analysts from Credit Suisse also noted that the release of Mulan will provide Disney+ with a few benefits outside of the movie. First off, Disney’s advertisements for Mulan are essentially ads for Disney+ as well. Similarly, promoting Mulan’s free release in December and Season 2 of Disney’s hit show The Mandalorian will bring more awareness to Disney+ for potential consumers.
Although there are many benefits to releasing Mulan on Disney+, the market for illegally streaming content could implode Disney’s entire strategy. With current technological capabilities, it is not too hard for people to upload movie streams on websites for anyone with a computer to access. Given that Mulan will be released on Disney+, it will be easier for individuals to upload better quality movie streams to these websites in less time. Hopefully, this doesn’t happen, but it should be a large concern for Disney.
The release of Mulan is expected to increase the stock price. Currently, Credit Suisse maintains an Outperfom rating on shares of Disney with a price target of $146.
Disclosure: At the time of publication, I am long The Walt Disney Company (DIS). I wrote this article myself, and it expresses my own opinion. I am not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.