Disney can easily afford its Mulan experiment
Thank heavens for Disney princesses. Amid a wasteland of empty theme parks, cruise ships and cinemas that left the media group nursing a near $US5 billion ($6.9 billion) quarterly loss, the streamed debut of new film Mulan should give sales a boost.
Streaming is Disney’s very own heroine riding to the rescue. With most business segments shut down, Disney+ racked up 60.5 million subscribers in less than a year. Add in streaming services Hulu and ESPN+, and there were more than 100 million of them.
Netflix is still ahead with 193 million subscribers. But Disney’s mix of sports and homegrown brands suggest it can one day catch up. Jeffrey Katzenberg and Meg Whitman, the moguls behind unpopular new short-video platform Quibi, must be seething.
Mulan should draw in a few more subscribers, even if they have to pay extra for this live-action remake. The story of a young woman who disguises herself to battle invaders in China will cost $US29.99 (about $42) to download. This is four times the price of a monthly Disney+ subscription but less than a family trip to the cinema. If about 7 million subscribers download the movie, Disney could recoup the reported $US200 million cost.
Even so, chief executive Bob Chapek says video on demand is no new business model. VOD is unlikely to match box-office sales. Disney’s live-action remake of The Lion King was one of the highest-grossing movies of all time, topping $US1.6 billion at the box office. To reach that, Disney would need 53 million of its 60.5 million Disney+ subscribers to pay up. Considering millions have a free subscription via Verizon, this is not likely.
Mulan should still offer a sales bump at a time when Disney’s other businesses are suffering. Another consolation is the company’s grip on costs. Revenues from Parks, Experiences & Products were $US5.6 billion lower than the previous quarter. This is far more than the $US3.7 billion fall in profits (which led to a near $US2 billion divisional loss).
Disney’s balance sheet is still debt-heavy. But with $US23 billion of cash on the balance sheet, The Mouse can afford to wait until the public is ready to mingle again.