Winners and losers as Disney sends Mulan straight to streaming

Liu Yifei in an action scene in Mulan, streaming on Disney+ Premium Access. Photo / Disney

Ouch. Back in May, one analyst said, "We expect the global cinema industry will begin to re-open from July, when two new blockbusters are slated for release - Chris Nolan's Tenet and Disney's Mulan. This will be a key catalyst for Vista's business to recover."

In reality, the pandemic has hit harder and longer than many anticipated, impacting - among many others - theatre chains and NZX-listed Vista Group, which has something of a global lock on the software used to manage cinemas and market their product.

Warner Bros' Tenet and Disney's Mulan were both pushed back to opening on the first weekend in September.

The brain-bending Tenet's box office was a respectable US$20 million over its first weekend in the US.

Disney, of course, took the more radical step of offering Mulan online-only in most territories, through its Disney+ streaming service.

Kiwis, for example, can pay $39.99 to watch Mulan unlimited times on multiple devices. That's on top of your regular Disney Plus monthly subscription of $9.99 (Americans pay US$29.99 on top of their usual US$6.99 sub).

On the face of things, it looks like a potentially lucrative jape for Disney.

The company has signed on Disney+ subs at a rapid clip since the service launched last November. with its third-quarter report, it said some 57.5 million had signed on as of June 27.

That meant in around half a year, Disney+ had become the third-largest paid-subscription streaming service on the planet behind Amazon Prime Video (around 150 million) and Netflix (around 193m).

Vista CEO Kimbal Riley had no immediate comment, but he did share some of his recent reading material, which included a round-up of reviews, many of which panned the Magic Kingdom for diminishing the film by confining it to TVs and iPads. "Why on earth didn't Disney put this on the big screen?" asked Robbie Collin in The Telegraph, for example.

He also noted a Deutsche Welle piece that noted had it given Mulan a full theatrical release, it could have reasonably expected a global box office around US$1.1 billion - the receipts generated by another of its recent live-action reboots, Aladdin.

Disney only gets to keep around half the box office, versus 100 per cent with its streaming service.

Still, DW says to make Aladdin-level profits on Mulan, the studio would need around 30m people — or roughly half of Disney+ subscribers — to rent Mulan at US$29.99/$NZ39.99 a pop.

It considers that a tall order, especially in a world hit by a once-in-a-lifetime economic recession. And I'd say its a taller order still, given most Disney+ subs will be aware that Mulan will stream "free" - or at least be included within their regular monthly sub - from December 4.

Personally, I decided to give it a pass. On the plus side, $39.99 was still cheaper than taking my family to the movies, especially after parking and that $7 carton of popcorn and $5 bottle of water. And given Mulan was shot in NZ with a Kiwi director (Niki Caro), my heart started to swell and my finger edge toward clicking the pay button. Still, gathering the kids around a small screen is just not the same. No one was feeling a sense of occasion, let alone $39.99 of occasion. I closed Chromecast and we reverted to the primordial NZ urge to watch TV1.

And there's another factor denting enthusiasm: a putative boycott based on star Liu Yifei's comments in support of Hong Kong police.

So it seems Mulan could well fall short of Aladdin's US$1.1b haul and, one sunny day when the pandemic finally fades, Disney will presumably want to return a theatrical run to the schedule.

But it's also fair to say that analysts have been taken aback by the success of Netflix and Disney+ and other streaming services during the pandemic. Just as Covid-19's forced experiment showed working-from-home was more effective than most thought, it's shown more will stream, and pay-per-view, than either thought.

That means things might never be the same.

Already we're seeing systemic changes. Toward the end of July, for example, AMC Theatres - the largest cinema chain in the US - reached an agreement with Universal Studios to narrow AMC's theatrical window from 90 days to just 17.

That means future installments of Universal franchises like Jurassic Park could hit streaming services just two and a half weeks after theatres.

Analysts are already rubbing their hands together over a new acronym PVOD - premium video on-demand - for titles that cost US$20 or more on-demand.

This is by no means all-bad for Vista.

Granted, the company's shares were battered by the closure of cinemas worldwide. And there simply no sugarcoating the news, for Vista and a number of its now-ex employees, has been bad.

But as cinemas reopen their doors, Riley argues that they will need to be more intensively managed (by his company's software, naturally) than ever.

And if most movies do shift to shorter theatrical runs, that will mean more pressure for cinemas to get maximum bums on seats for every showing. Again, Vista's there to help.

Liu Yifei in an action scene in Mulan, streaming on Disney+ Premium Access. Photo / Disney

Not all investors are buying this argument.

In May, as Vista troughed at 92c, Craigs IP analyst Stephen Ridgewell upgraded the stock to overweight, with a 12-month target price of $2.54.

Vista has since staged a modest recovery (shares were recently trading at $1.88) but it's still some distance from its 2019 heyday when it touched $6 and a $1 billion market cap.

Unlike in most of the movies it promotes, a happy ending is not guaranteed. But neither are the odds perhaps as long as they initially appear.