Over the past year, Disney has had to adapt to a changing world, which saw cinemas around the globe close down and Disney trialled releasing films on premium video on demand as “Disney+ Premier Access”. Earlier this year, Disney has already released “Raya and the Last Dragon” simultaneously in cinemas and on Premier Access. With “Cruella”, “Black Widow” and “Jungle Cruise” also being duel released.
Recently, Walt Disney CEO Bob Chapek spoke at the J.P. Morgan Global Technology, Media And Communications Conference and was asked during a Q&A about the companies use of Disney+ Premier Access and its future.
What did you learned so far from these different distribution methods during COVID?
Well, one of the things we learned is flexibility is good because there’s two dynamics going on. One is people’s willingness to return to theaters and theaters ability to return in a meaningful way. And then the second one is the change in consumer behavior that’s happening naturally with COVID probably acting as a bit of a catalyst, but it was going to happen anyway. And so we’ve got those two dynamics at once, and that’s where the flexibility comes in because for us, whether we’re looking at a theatrical exclusive window with a fairly dramatically shortened timing window between the first and second offerings, or whether we’re looking at theatrical plus or Disney+ Premier Access or whether we’re looking at taking something directly to our service, we’re really celebrating that flexibility. And I think we’re trying to offer consumers more choice as they gain confidence in how they want to go ahead and return to theaters.
Theatrical exhibition for us is a very good thing because it helps us build our franchises, which then turned to Disney flywheel and create so many opportunities across parks and consumer products. But as we’ve seen with the domestic box office and to a lesser extent, the international box office, that seems to be recovering at least in some markets, so a little bit more robustly if you will. But we’re seeing some hesitancy to return in a way that would look anything like normal back in 2019. And as such during this sort of interim period, it’s really nice to be able to give consumers some flexibility.
How do you decide which film gets distributed either direct to the service or through premier access or just in theaters?
Well, there’s a whole bunch of data points we have to assimilate to make those decisions. But the first consideration is that a big tentpole theatrical franchise, and if it is, it’s something that like a Marvel movie or a Lucas movie, something that’s going to have a lot of legs plays into a larger mythology, and that’s the way that those fans tend to prefer to consume the movie.
On the Black Widow question, we’ve already delayed Black Widow a couple of times. We didn’t want to delay it again yet. At the same time, we always knew that there was a risk that exhibition wasn’t going to be fully developed or that consumers wouldn’t want to go back and sit in theater. So we realized that we had to sort of prime the pump and give theatrical exhibition a chance, but we couldn’t put all our eggs in the theatrical exhibition basket because we knew that in the weeks leading up to the decision, the domestic market was not coming back and it’s still fairly weak and so we’re really confident that we made the right call there. So we’ve given the consumer choice to either watch it in theaters if they feel comfortable or if not, watch it in the comfort and the safety at their home.
On the Luca question, when you have a direct-to-consumer service, we’ve increased our investment in creative content to ensure that all channels of distribution have a full compliment of offerings to sort of keep everybody happy, but nowhere is that more of the case than Disney+. And we want to make sure given the importance of Disney+ to us in the marketplace and our shareholders, that we keep feeding that machine and taking a wonderful family film like Luca in the middle of summer and putting that direct on the service. We’ll have sort of similar impact like we saw when we did Soul back at the holiday time, and that was a huge boost to Disney+. And we believe that Luca will get a lot of eyeballs, a lot of people seeing it and a lot of people enjoying it as we put it on the service for free this summer.
And then in terms of the exclusive theatrical window, we announced two titles. Obviously, we announced Shang-Chi and Free Guy, both with reduced 45-day windows. And that’s later in the summer when we hope – we hope, I’m not sure, but that the theatrical marketplace will recover more fully, and that type of exclusive distribution will make more sense. But again, flexibility is a good thing. At some point though, you’ve got to kind of step, like I like to say off the dock and on to the boat. And I think those are the titles where we’re going to take a shot at it and see how it goes.
Do you expect to see a more traditional theatrical window for most films?
Well, we haven’t really – beyond this current fiscal year, we’ve not really said what we’re going to do because again, we’re celebrating that flexibility that we’ve given ourselves, so that we’re not going to make a decision and sort of regret it depending on the rate being too conservative or too aggressive. So we really haven’t gone there.
In terms of the splits, I think it was the Cinemark’s CEO that said, I won’t look for any significant change in splits relative to what the historical splits have been. So I don’t really think those necessarily will change. I think the consumer is driving the shorter windows. If we have a movie that plays for four weeks or six weeks, there’s not a lot of reason to sit on it for the next six or seven months. And I think the consumers have realized that they’ve got the power and they can essentially make those calls. And we’re a consumer friendly company and we’ll follow their lead hence the 45-day windows.
Do you think it changes consumer behavior in the sense that they might choose to wait and not go to the theaters and wait for the 46-day or too soon to tell?
46 days, six weeks, that’s a long time to wait. If you’re a Black Widow fan, you’re not going to wait that amount of time. If you’re a Free Guy fan, you’re not going to wait that amount of time, if you’re a Shang-Chi fan, if you’re an Eternals fan, I don’t really see six weeks. I mean, if you said six days and maybe, but we see the fervor when we release new content on Disney+ how at midnight people are lined up to watch that title. I don’t think people have that much patience to be honest with you. So I don’t really see that as being a causal thing. I think it’s an effect thing of changing consumer behavior.
It doesn’t look like things are going to return to exactly how Disney released films pre-pandemic, where new movies could take 6 to 9 months to arrive on Disney+, like “Toy Story 4”, “Aladdin”, “Captain Marvel” or “Star Wars: The Rise Of Skywalker”. But films will be arriving much quicker and Disney+ Premier Access may stick around a little longer if consumer habit change and if it’s financially successful. And there is also pressure on “Free Guy” and “Shang-Chi”, to see if people will return to cinemas later this year.
Do you like the idea of Premier Access continuing?