Theaters Versus Streaming After the Pandemic

Summer blockbuster season has arrived in full force with the consecutive releases the past two weekends of F9 and Black Widow. We are not quite out of the pandemic-affected box office era, but signs of hope are on the horizon. F9 managed to generate larger returns on its opening weekend run than the Fast and Furious spinoff Hobbs and Shaw (respectively, $70 to $60 million), but less than the eighth installment in the series, The Fate of the Furious, made in its first weekend of $98 million.

Again, not quite out of the pandemic era! F9 is currently projected to reach domestic totals of around $160 million, about 70% compared to the $226 million haul taken in by The Fate of the Furious. But making 70% of the preceding film that managed to make an international sum of $1.2 billion, while F9 has to serve as the rare blockbuster to draw fans into theaters still seems fairly hopeful during pandemic times.

Universal held firm on F9 premiering in theaters after delaying the film from March 2020 to June 2021, and even avoided a same-day release of the film on streaming platforms. Black Widow, which was released simultaneously on Disney+ and in-theaters this past weekend, made slightly more in-theaters than F9 opening weekend, with $80 million in box office returns.

$80 million doesn’t look too terrible compared to Spider-Man: Far From Home’s $92 million and Ant-Man and the Wasp’s $75 million opening weekends. Black Widow even managed to premier on only 40 fewer screens than Ant-Man and the Wasp managed to screen at its maximum during its run in 2018. Most likely, quite a few theaters still impose some seating restrictions, so maximum possible occupancy may still be limited, but 4,160 screens are at least back in the conversation of pre-pandemic numbers and a huge increase from the meager 3,084 screens at which Godzilla vs. Kong peaked.

Black Widow also looks strong overseas, as it has grossed another $78 million abroad. Movies, well superhero movies (same as non-pandemic years), may finally be back! Theaters had a really tough time in 2020. They laid-off workers, declared bankruptcy, and saw their stock prices decline to their lowest-ever levels (and then subsequently rise beyond ever imaginable heights through Wall Street gambling). But now, finally in July of 2021, regardless of the ever-growing number of COVID cases once again gracing the news, theaters are closer back to form.

CRAP!

In a move of pure swagger from the mouse, a studio finally released some actual streaming data with the announcement of Black Widow’s additional $60 million from Disney’s streaming service on opening weekend. That $60 million is the largest ever dollar number we have heard from one of the streaming services. But, then again, we generally rarely get numbers like viewers or revenue generated from any of the streaming services.

Black Widow was released same-day on Disney+ for a rental fee of $30, which means it only even took around 2 million of the 104 million total Disney+ subscribers to rent the film.  This is the fourth Disney+ Premier Access release, after Mulan, Raya and the Last Dragon, and Cruella. Disney gave out zero figures for the number of viewers of opening weekend or any weekend, which probably says something about Black Widow succeeding to a much greater degree than those other films.

The numbers we do have come from second-hand sources such as estimates based on Neilsen and Antenna data (which is probably a rough estimate, to say the least). Mulan was the first to release as a Premier Access title, during a peak of COVID cases in the United States and which caused Disney to nix the theatrical release for domestic audiences entirely. Internationally, the film was only able to generate about $68 million so the Disney+ numbers have to do some heavy lifting for the overall returns for this film to be profitable. Antenna estimated Mulan returned 33.5 million for its opening weekend and a potential final total of $150 million for its entire run as a $30 add-on.

Now, Mulan had no competition from a theatrical release unlike Black Widow or Cruella which makes the potential Mulan figures, if true, possibly a bit disappointing. Cruella was estimated to have made $20.5 million on Disney+ Premiere Access for its opening weekend, but even an additional $26.5 million from domestic theaters will likely sink Cruella’s fate as the film reportedly cost $200 million to make.

Raya ended up grossing $54 million domestically, but according to Antenna only generated an additional $26.8 million on its opening weekend through Disney+.
Mulan, Raya and the Last Dragon, and Cruella have all had articles both calling these releases successful or failures using the same data. For instance, Mulan’s opening weekend tally of $33.5 million was derided by a media analytics firm partner and simultaneously praised by a Forbes box office analyst. The confusion here is that $33.5 million looks terrible for a Disney live-action movie theatrical revenue, but does not look too bad when you factor out that theatrical rake of revenue.

Theaters take an average 50% of every dollar spent on tickets, whereas the money made on Disney+ is potentially entirely revenue going back to Disney. $33.5 million of revenue through Disney+ now looks analogous to about $67 million of revenue at the traditional box office. $67 million still is not great for a Disney live-action movie but is at least in the ballpark of some of the recent reimaginings.
However, this quick and dirty math to find the results of Disney+ revenue or profit generated by these Premiere Access titles is just as flawed. We have no idea where the purchases were made. If they were done online through a web browser, then yes this might be entirely Disney+ revenue, but if they were rented through Apple TV then we are looking at Apple taking a cut of 30% -- still much lower than the theatrical cut, but not nothing.

Regardless, including any sort of digital platform cut makes the already sort of paltry returns for these films look even worse. Of all the film distributors, Disney has the most power and has even received 65% of box office returns from films such as Star Wars: The Last Jedi. That sort of additional theatrical share for Disney would not have been out of the question for some of these other films.

But then we get back to Black Widow’s publicly announced Disney+ revenue of $60 million. Again, theaters in the United States are returning to some semblance of normal with relaxed social distancing and about the same number of screens shown on for major blockbusters of around 4200 screens. This $60 million public declaration from Disney is coming at a time when we can get back to the long-held notion that same-day releases hurt theaters. The theatrical domestic total of $80 million for Black Widow is in line with prior efforts like Ant-Man but that $60 million most likely ate into some of the revenue that would have gone to theaters, but it is impossible to say to what degree.

If the $60 million made from Disney+ was entirely revenue generated for Disney, then that could be in line with an additional theatrical box office of $120 million, for an opening weekend domestic return analogous to $200 million for Disney. A $200 million opening weekend would rank 1st most years, and near the bottom of the top ten all-time, so this was an impressive release for Disney. This haul was so impressive that President of Paramount+ Kelly Day came out and said the following after the numbers were revealed:

Kelly Day, who overseas Paramount+ as President International Streaming Services at ViacomCBS, has said that the numbers clocked by Disney’s Black Widow this weekend show that continued experimentation with theatrical windows is an “opportunity”.

“The success this weekend of Black Widow on both the theatrical and on the streaming side speaks to not only the complexity of navigating these windows but also the opportunity,” the exec said during a panel at the Cannes Film Festival Marche’s Meet The Streamers event. “There is still an incredible opportunity for people who want to sit in the movie theater and have that experience, but also people who want to have the experience at home.”

For the theaters though this was “just” a good haul of $80 million. An $80 million opening weekend in a normal year would put Black Widow somewhere in the 8-13 spot of releases – great, but not best of the year sort of numbers. Definitely a hopeful sign of progress coming out of the pandemic, but also a sign of a new normal of competition between Disney and theaters.

The relationship is still symbiotic, as Disney benefits from releasing their films in theaters, and theaters rely on Disney for a huge amount of their revenue. In 2019, Disney accounted for 8 of the top 10 films and about 33% of the total box office returns which allows Disney to be quite cocksure of itself (as seen in the aforementioned negotiations over the 65% revenue take from The Last Jedi).  Theaters are weary to give up much after being upturned by the pandemic but may feel threatened with this additional bargaining chip Disney now has in their pocket.

Most studios have already stated their plans for 2022. This was a year of experimenting and trying out new release schedules and same-day releases or, in with HBO Max, free releases (for paying customers). We just didn’t really realize one of the strategies would work. Warner Brothers has already stated their intention for ending the same-day releases of their movies for free on HBO Max. The old movie studio is instead opting for theaters with a traditional window of theatrical exclusivity– but WB’s plan for HBO Max always seemed more a ploy for writing off films meant to release during the pandemic to gain popularity for their service. It always seemed they were willing to take the loss to grow the market share of their app.

Disney has not yet announced their full plans, and unlike HBO Max, Disney+ has apparently had much more success. Disney has another Premiere Access title coming in July in Jungle Cruise, but have already announced that the next Marvel movie will premiere in theaters with a timed exclusivity window of 45 days (instead of the prior 90-day window before the pandemic). It was only a month ago that Disney CEO Bob Chapek said the following during an investor’s call:

"But at the same time know that for those consumers that are a little leery still about going into a packed theater, that they can go ahead and watch it in the safety and convenience of their home. In terms of going beyond this fiscal year, we've not announced exactly what our strategy is going to be in terms of which titles will be theatrical plus Disney+ Premier Access, which ones will be direct to Disney+ or which ones will go into Theatres, but know that we'll continue to watch the evolution of the recovery of the theatrical marketplace and we'll use that flexibility to make the right call at the right time." – Disney CEO Bob Chapek

We will have to follow up after the final tally of Black Widows run in theaters, and IF we ever get additional numbers from its Disney+ Premier Access run. Box office revenue is increasing week over week, but much lower than prior years. Hopefully, theaters and streaming can coexist in the post-pandemic landscape. It won’t be until late 2021 or 2022 for theaters to even get a shot at competing with the streaming services when the studios will allow for a longer release exclusivity window.