Cin­e­mas forced into duel with stream­ing gi­ants

Dis­ney’s de­ci­sion to re­lease Mu­lan on­line has raised fears over the long-term fu­ture of pic­ture­houses, finds Michael Cog­ley

The Daily Telegraph - Business - - Technology Intelligen­ce -

When Warner Bros an­nounced a de­lay in the cin­ema re­lease of Christo­pher Nolan’s Tenet in July, all eyes were on Dis­ney’s Mu­lan to fill the void. The $200m (£152m) live-ac­tion re­make was slated for re­lease in cin­e­mas this month. On Tues­day, how­ever, Dis­ney dashed any hope that it could re­vive the for­tunes of strug­gling pic­ture­houses.

Mu­lan will now be re­leased di­rectly on to its stream­ing ser­vice Dis­ney Plus. Pa­trons can ex­pect to pay $29.99 (a UK price has yet to be an­nounced) to stream the film from Sept 4. Dis­ney is not aban­don­ing cin­e­mas al­to­gether – the film will also go to the­atres where con­di­tions al­low. Boss Bob Chapek at­tempted to down­play the move by de­scrib­ing it as a “one-off ” and not an over­all shift in strat­egy.

But the re­lease de­ci­sion marks an ir­re­versible shift to­wards stream­ing and shows just how much the the­atre in­dus­try’s grip on new films is giv­ing way. “It’s the di­rec­tion of travel; if you do it for Mu­lan, why wouldn’t you do it for Avatar or the new Star Wars,” says Michael Hew­son, an an­a­lyst at CMC Mar­kets. “Once you’ve set the prece­dent, it’s out there.”

Stream­ing is the money maker for Dis­ney. Shut­tered theme parks, closed cin­e­mas and lim­ited sports broad­cast­ing have brought the multi­na­tional gi­ant to its knees dur­ing lock­down. On Tues­day, it posted a $4.7bn loss over the last three months.

Chapek will un­doubt­edly be aware of the po­ten­tial im­pact big films can have when re­leased through paid-for on-de­mand ser­vices. On April 10, Uni­ver­sal Pic­tures re­leased its Trolls

World Tour fea­ture film through on-de­mand ser­vices, much to the frus­tra­tion of cin­ema chain AMC The­atres. The film did well, tak­ing in around $100m within its first three weeks of play in the US alone.

Lewis Grant, a port­fo­lio man­ager at Fed­er­ated Her­mes, be­lieves

Uni­ver­sal’s move could have spurred Chapek to pull a sim­i­lar lever.

“Video stream­ing of­fers an en­tic­ing op­por­tu­nity for Dis­ney to cut out the mid­dle­man and dis­trib­ute pay-per­view movies di­rectly to con­sumers,” he says. “In the early days of the lock­down there was a clear re­luc­tance to chal­lenge the ex­ist­ing model, with film stu­dios choos­ing to post­pone most of the 2020 block­busters – for ex­am­ple Dis­ney’s Mu­lan, MGM’s new James Bond and Warner Bros’ Won­der Woman 1984. How­ever, Uni­ver­sal’s

Trolls World Tour showed that a new di­rect-to-con­sumer model can work, al­beit risk­ing the wrath of the cin­ema op­er­a­tors.” Dis­ney’s de­ci­sion to re­lease

‘Video stream­ing of­fers an en­tic­ing op­por­tu­nity for Dis­ney to cut out the mid­dle­man’

Mu­lan on­line fol­lows a deal an­nounced last month be­tween Com­cast’s Uni­ver­sal Pic­tures and AMC En­ter­tain­ment Hold­ings, the largest US cin­ema owner. Un­der that agree­ment, Uni­ver­sal can re­lease films for home view­ing as soon as 17 days af­ter their re­lease in cin­e­mas.

Cine­mark claims the “overly ag­gres­sive short­ened the­atri­cal win­dow” could dam­age the mid to tail-end of a film’s life.

But now more filmmakers are opt­ing to push their re­leases right into the homes of would-be view­ers. In May, Ap­ple swooped in for Sony’s Tom Hanks World War Two sub­ma­rine thriller Grey­hound in a deal worth around $70m to bring it to its own stream­ing ser­vice. Net­flix is also re­port­edly near­ing a deal to buy the world­wide rights to Amy Adams’ The

Woman in the Win­dow drama from 20th Cen­tury Fox.

The flurry of tie-ups will un­doubt­edly irk cin­ema own­ers who man­aged to re­tain rel­e­vance as stream­ing ser­vices scaled new heights over the past decade.

“Thanks Dis­ney chums, we’ll be here warm and wait­ing for you when you plan to re­turn, hav­ing ex­isted on thin air and love and cud­dles and happy thoughts,” tweeted Kevin Mark­wick, who owns the in­de­pen­dent Pic­ture House cin­ema in Uck­field.

Cin­ema ad­mis­sions topped 176 mil­lion in the UK last year, putting it on par with the 2018 tally of 177 mil­lion, which was the high­est on record for 50 years, ac­cord­ing to in­dus­try body Cin­ema First.

The box of­fice boom was led by a se­ries of high-pro­file hits in­clud­ing

Avengers: Endgame, The Lion King, Toy Story 4, Joker, Once Upon a Time in Hol­ly­wood and Knives Out.

Those num­bers are ex­pected to fall dra­mat­i­cally and hold­ing on to these re­leases will be cru­cial for their sur­vival, Hew­son says.

“The main at­trac­tion for cin­e­mas has been these big block­busters,” he says. “But un­less cin­e­mas can keep the rights to these big hits then what’s the point of them?”

Hew­son de­scribed moves by the likes of Dis­ney and Ap­ple as “land grabs” with the multi­na­tional gi­ants carv­ing out more mar­ket share of the en­ter­tain­ment in­dus­try.

How­ever, he fears that Dis­ney may have priced too high with its Mu­lan re­lease.

“First and fore­most, you have to de­ter­mine whether or not there’s a de­mand for a $30 pay-per-view movie,” he says.

“If you go to the cin­ema it will cost around £12 for a ticket. Peo­ple are not go­ing to pay $30 for that, why would they when we’re fac­ing a re­ces­sion?”

Should Mu­lan prove a hit for Dis­ney’s stream­ing ser­vice, it could deal yet an­other ham­mer blow in what has been a dev­as­tat­ing year for the cin­ema in­dus­try.

Dur­ing the same pe­riod, stream­ing has con­tin­ued to strengthen its hand. Dis­ney Plus is al­ready more pop­u­lar with chil­dren than BBC iPlayer de­spite only be­ing re­leased here in March, ac­cord­ing to fig­ures from Of­com.

A to­tal of 12 mil­lion Bri­tons signed up to new stream­ing ser­vices dur­ing lock­down, with peo­ple spend­ing around an hour and 11 min­utes per day watch­ing these ser­vices in April.

Cin­e­mas have been re­pur­posed dur­ing the down­turn as di­ver­si­fi­ca­tion could help to off­set the im­mense rev­enue hit brought about by the coro­n­avirus.

In Scot­land, an Odeon com­plex was tested for use in jury tri­als where ju­rors could watch a trial un­fold on a big screen while also so­cial dis­tanc­ing. Such a model could re­port­edly help free up court rooms.

Any such in­cen­tive would likely pale in com­par­i­son to the needs the cin­ema in­dus­try will have as it bat­tles to keep the stream­ing gi­ants from tak­ing away box of­fice hits.

Yifei Liu in Dis­ney’s Mu­lan, whose re­lease will now take place via its stream­ing ser­vice

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