Disney+ Premier Access: the big challenge for cinemas post-pandemic

Films typically have a 90-day exclusive window in cinemas before being released on other mediums, meaning the only legal option for consumers eager to see new movie releases is to visit a theatre.

As the Covid-19 pandemic caused extended cinema closures, Disney launched Premier Access on their Disney+ streaming service, allowing subscribers to pay an additional once-off fee to stream the latest film releases at home.

Premier Access made its debut on September 4, 2020, with the highly anticipated live-action remake of Mulan. Initially scheduled for a theatrical release in March 2020, Mulan was delayed until late August as cinemas remained shuttered due to the pandemic.

As August neared and Covid-19 cases continued to grow in key markets, including the US, Disney announced Mulan would release on its streaming platform for A$34.99. Three months later, the film was made available to all Disney+ subscribers.

At the time, Disney CEO Bob Chapek said he expected this would be a one-off occurrence the company could learn from.

Due to the timing of its release, Mulan was digitally available in most territories before opening in theatres. As cinemas began to open with varying capacity restrictions, Disney returned to cinema releases on-again and off-again in key territories. Since then, Disney has released another four films using the same simultaneous streaming and cinema release model.

The Premier Access exclusive period of 90 days mirrors the traditional cinema-exclusive period for theatrical releases. Source:  Disney Plus and The Verge

Initially, Disney did not disclose the streaming earnings of any titles on Premier Access, leading to an abundance of journalistic speculation that the business model was not providing a substantial return.

Disney revealed the earnings for a title on Premier Access for the first time with the release of Black Widow. Black Widow reportedly earned US$60 million on Disney+ during the opening weekend, equivalent to 27 per cent of its US$218.8 million total earnings. It was the first time any movie studio has revealed hybrid revenue data of this nature.

In Black Widow’s second week, the box office earnings came in at US$26.3 million, a 67 per cent drop from opening week. It marked the steepest second-week decline of any film in the Marvel Cinematic Universe franchise.

Disney did not disclose Premier Access revenue for any subsequent weeks, suggesting these figures made a minimal positive impact on the overall earnings. However, Black Widow was the first film in the MCU to endure an opening in a global pandemic, making it difficult to analyse its earnings against other films in the high-performing franchise.

At the time of writing, Universal’s F9: The Fast Saga, released exclusively in theatres only two weeks before Black Widow on June 25, earned a worldwide gross of US$721 million. In contrast, Black Widow earned US$379 million globally.

Both films screened in a similar number of cinemas, making their availability comparable. The major distribution difference is that F9: The Fast Saga committed to an exclusive cinema only window of 35 days minimum. The stark variation in revenue adds fuel to the argument against hybrid film debuts.

All figures are shown in USD. Source: Box Office Mojo.

Two primary reasons seem to influence the revenue difference between a film released exclusively in cinemas and one released simultaneously to a streaming platform. The first is an increased risk of piracy. And second, is studios essentially cannibalise their profits by giving viewers the ability to rewatch the latest releases at no extra cost.

Findings reported by Van der Sar on Torrent Freak indicate, Black Widow is the most pirated film of the pandemic period. After its release, the film spent three consecutive weeks at the top of the chart as the most torrented movie. Comparatively, F9 did not appear on the list until five weeks after its release date and was only first on the list for one week.

The National Association of Theatre Owners theorises that streaming services are conducive to piracy as they make it significantly easier to obtain a high-quality file to be illegally shared.

“When a movie is released simultaneously to a streaming service, a pristine copy of that movie is made available day one that it’s in cinemas,” they said.

Other Premier Access titles exhibited a similar pattern. The week of its release, Mulan was the top pirated movie for two consecutive weeks, temporarily moving down to second place after the release of Enola Holmes, before reclaiming the top spot for another two weeks.

Has streaming killed the cinema? Source: Disney.

Raya and the Last Dragon became the top pirated film for two weeks in a row before dropping to second for a further two weeks. Cruella debuted in second and remained there for a fortnight. And Jungle Cruise premiered as the third most pirated film during its release week before jumping up to second for two continuous weeks.

An abundance of choice is also stimulating the issue of piracy. Commissioned by Screen Australia, the 2017 Nielsen report found the rate of piracy declined as more international streaming services established themselves in Australia.

However, more recent findings from Macquarie University cite growing competition in the subscription video on demand (SVOD) marketplace, providing increased choice for consumers, as a factor that may encourage audiences to return to piracy.

In a 2021 journal article for Popular Communication, Anne Major – Assistant Professor of Communication Studies at Young Harris College in Georgia, US – proposed that SVOD services increasingly resembled “big box stores like Walmart”, aiming to cater to all audiences with an extensive catalogue of content.

But this one-stop-shop relies on licensing deals between the film studios and streaming platforms. As more entertainment companies engage in the direct-to-consumer model by launching their own streaming platforms, it stimulates the loss of content aggregation.

As a result, consumers often subscribe to multiple services to access everything they want to watch, the cost of which is adding up. In Australia, subscribing to the six most popular streaming services would cost about A$60 per month.

Emma Stone in the 2021 film Cruella, Source: Disney.

Disney’s Premier Access price point appears to target families, working out to be considerably cheaper than taking the whole household to the cinema. But this is another factor in the dual-release strategy that prevents studios from profiting from multiple ticket sales.

Account sharing with family and friends across multiple households also complicates the equation of exactly how much revenue is lost, per viewer, over the life of a film.

The recent Premier Access title Jungle Cruise earned US$30 million or 33 per cent of its US$91.8 million total opening weekend earnings on the platform. After its release, it was unclear if Disney would continue this simultaneous direct-to-streaming business model as cinemas began to reopen.

Film and Television Professor at Goldsmiths University in London Sean Cubitt suggests franchise films, such as those in the Marvel Cinematic Universe, tend to attract viewers to buy and rewatch previous films before the next instalment.

Franchise films also draw repeat ticket sales from fans hoping to catch details they may have missed in their first screening.

Simultaneous release means studios are forgoing the opportunity to take advantage of these highly profitable activities, minimising their potential to financially “double-dip”.

In December 2020, three months after the introduction of Premier Access, Warner Bros parent company WarnerMedia announced a bold push to bolster their subsidiary streaming platform, HBO Max.

WarnerMedia would release their entire 2021 slate of films simultaneously in cinemas and on HBO Max. This catalogue included heavily anticipated blockbusters such as Godzilla vs. Kong, The Suicide Squad and Dune. These films were available to stream for a limited time of one month before temporarily leaving the service for a time.

Jungle Cruise, Source: Disney.

Notable directors working for WarnerMedia have been outspoken against blockbuster direct-to-streaming releases, saying they were unhappy about the deal to license content to HBO Max.

Dune director, Denis Villeneuve, wrote: “There is absolutely no love for cinema, nor for the audience.”

Christopher Nolan said the decision was disheartening for actors and filmmakers. “[They’ve] worked for years on projects very close to their hearts that are meant to be big-screen experiences,” Nolan said. “They’re meant to be out there for the widest possible audiences … now they’re being used as a loss-leader for the streaming service.”

Knocked Up director Judd Apatow said he was surprised by the move. “It’s the type of disrespect that you hear about in the history of show business. But to do that to just every single person that you work with is really somewhat stunning.”

Despite objections, as more studios enter the streaming market, variations of these strategies will likely continue in an attempt to grab a slice of the streaming pie.

Disney’s Premier Access made headlines in July 2021 when Scarlett Johansson, who played the leading role in Black Widow, filed a lawsuit against Disney for releasing the title on Disney+ without the promised cinema-exclusive period.

Johansson’s salary agreement was linked to Black Widow’s box office performance with a wide theatrical release. The contract was not intended to include streaming and failed to consider earnings through Premier Access.

While the lawsuit settled after two months, with undisclosed terms, it also raised questions of fair compensation for film-makers of hybrid releases when it remains unclear how much a film grosses on streaming platforms.

Raya and the Last Dragon. Source: Disney.

The shift of consumer habits toward favouring digital viewership has often raised the question, is this the end of television? But with new film release models and the response to the pandemic, it’s now a question of, is this the end of cinema? National Association of Theatre Owners CEO John Fithian believes it could be.

“Exclusive release periods remain vital to the survival and success of the theatrical experience,” Fithian said.

The Covid-19 pandemic has intensified the growth of the SVOD industry in Australia resulting in a rapid rise of individual subscribers and increased total market share.

A 2021 Roy Morgan survey on subscription viewership in Australia found the number of Australians watching a subscription television service increased by 16.2 per cent from 2019 to 2020.

After Netflix launched in Australia in 2015, OzTam’s 2016 viewing habit reports showed a drop of more than 18 hours per month of Australians watching television and an increase of 10 hours per month of online streaming in the same period.

The introduction of Premier Access and direct-to-streaming releases on other platforms could lead to a similar shift in viewing habits for moviegoers.

Research published this year in the Technology in Society journal showed that price, original content and anytime availability are among the top reasons consumers choose to subscribe to SVOD services.

Studies have confirmed the main psychographic factor affecting proactive consumption of media is a desire to interact and form social relationships with others. Without a period of cinema exclusivity, theatres face the uncertainty of box office attendance as moviegoers can conveniently fulfil these needs without leaving their homes.

Author of Hollywood survival strategies in the post-Covid-19 era Michael Johnson Jr suggests that, based on behavioural psychology, it will be difficult to abandon the collective habit of on-demand consumption amplified by Covid-19.

Migrating to simultaneous release models during stay-at-home orders was not intended to be a permanent change for studios. Though it’s now clear, long-term modifications to previous models are required.

Encanto. Source: Disney.

Audiences are willing to pay a premium to see films of the highest possible quality and perceive watching something on the big screen as an experiential event.

Media researcher Carter Moulton examined 20 years of blockbuster film premieres in 2020 and found that moviegoing continued to be a meaningful cultural experience.

By leveraging the cultural anticipation of films and offering once-in-a-lifetime exclusivity through marketing, studios convince viewers of the eventfulness of experiencing films in cinemas as soon as they’re released.

Promoting a film in this manner proves immensely profitable as fans often repeat viewing during the exclusivity period before purchasing or streaming at home when a film becomes available.

Paramount’s A Quiet Place: Part II and Universal’s F9: The Fast Saga demonstrated consumer willingness to pay for cinema screening rather than wait months for streaming availability.

Both films premiered during the 2021 Summer release season with cinema-exclusivity periods. Despite opening during pandemic restrictions, both films showed longevity in theatres with strong box office performances during their run.

Disney’s remaining 2021 film roster will release with an exclusive theatrical window of 45 days. Except for Encanto, an animated family musical fantasy film, which will only have a 30-day cinema exclusive period, ensuring it will be available on Disney+ by December 24 for the holiday season.

Following the September release of Shang-Chi and the Legend of the Ten Rings, the next instalment in the MCU is Eternals, released on November 5, 2021.

Analysing the financial performance of these MCU films in contrast to Black Widow will be interesting now that Disney has reverted to an exclusive theatrical debut model.

However, Warner Bros is still testing the streaming waters. To continue attracting new subscribers, the studio plans to produce 10 films to be released simultaneously in cinemas and on HBO Max in 2022.

CEO of WarnerMedia Jason Kilar, said: “I certainly don’t anticipate us going back to the way the world was in 2015 or ’16 or ’17, where windows were quite lengthy between theatrical and home exhibition.”

Warner Bros will follow a similar exclusive window reduction to Disney, halving the conventional 90-day period to 45 days.

As lockdown mandates lift, it remains to be seen whether consumers will return to cinemas en masse or continue streaming the latest releases from the convenience of home.

If Disney executes the Premier Access model again in 2022, despite promising post-pandemic box office performance, it will cement streaming as a key component of Disney’s business model. Especially given the negative short-term ramifications on cinemas, ticket sales and total revenue.

The studios hold all the cards when it comes to the future of film distribution, but it seems the best option for everyone is to maintain some form of exclusive theatrical release.