In its fiscal second-quarter results, Disney pegged the coronavirus pandemic’s impact on its business at around $1 billion. However, the conglomerate noted its Disney Plus streaming service experienced a 272 percent increase in revenue from Q1. With the segment approaching profitability and movie theaters across the world still shuttered due to COVID-19, the House of Mouse is considering releasing its films via premium video-on-demand (PVOD).
How COVID-19 Affected Disney
As the coronavirus outbreak turned into a pandemic, it began to affect the different parts of the entertainment giant’s business. The corporation discontinued its cruise service and closed its theme parks to halt the spread of COVID-19 earlier this year. The company also suspended production of its various movies and TV shows and delayed the release of its summer blockbusters because of widespread cinema closures.
Though Disney exceeded Wall Street’s FQ2 revenue predictions, the conglomerate is stinging from the loss of its key profit generators.
That said, the firm’s latest quarterly report featured a bright spot in the form of its Disney Plus subscription-video-on-demand (SVOD) platform. The unit made $4.1 billion from 54 million subscribers, a figure bolstered by COVID-19 spiking streaming service sign-ups. Initially, the corporation expected the service to reach profitability in 2024 when it had 60 million to 90 million subscribers.
However, with its recent surge in popularity, the SVOD could become a money generating unit sooner rather than later. In addition, Disney might use the platform to distribute its big-budget films in the post-pandemic era.
Disney Might Debut Blockbusters Online and in Theaters
In an earnings call, Walt Disney Company CEO Bob Capek said his organization would consider debuting its blockbusters online.
“We may have to make some changes to that overall strategy just because theaters aren’t open or aren’t open to the extent that anyone needs to be financially viable,” said Capek. Indeed, the corporation already decided to premiere one intended upcoming theatrical release, “Artemis Fowl,” on Disney Plus. The firm said it made the change because of its “demographical appeal,” but it is likely putting the $125 million feature on its SVOD to optimize its financial returns.
Last month, NBCUniversal sent shockwaves through the entertainment industry when it made “Trolls World Tour” available for rent online in tandem with its theatrical bow. The conglomerate charged the public $20 to see the family film via various video-on-demand services, and it grossed $100 million in three weeks. The firm subsequently announced it would debut its forthcoming features in theaters and on PVOD.
NBCUniversal’s move prompted AMC Theaters and Regal Cinemas parent company Cinemaworld to threaten boycotts of its upcoming dual releases. However, as the corporation made more from “Trolls” on PVOD than it would have earned theatrical, it has an incentive to stay the course. Since a recent survey found only 20 percent of the American public would return to the movie theaters as soon as they reopen, Disney might follow its rival’s lead.
Ultimately, Disney and the other major studios probably will not abandon cinemas right away because they crave the billion-dollar cumes that come with big event releases. But a distribution channel that offers greater profits and increased appeal to younger consumers is undeniably appetizing. As such, historians might look back upon the coronavirus pandemic as the event that heralded the end of movie theaters.