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Despite Record Streaming Subscriptions, Disney Is Tiptoeing Around the Movie Theater Drama—For Now

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Image: Disney+

As a very ugly standoff between legacy theaters and legacy studios plays out in real time, Disney appears to be treading lightly around the sensitive issue over how studios will handle releases now and in a post-covid-19 future.

Last week, remarks by NBCUniversal executive Jeff Shell about releasing new premiere films on demand even after theaters reopen ignited a very public feud between Universal Pictures, AMC, and Cineworld (which owns Regal) that could forever change the way we see movies. AMC and Cineworld, furious over the remarks, banned Universal movies from their theaters on the grounds that Universal would have broken the terms of its agreements with them for exclusivity if Universal releases movies both in theaters and as POV simultaneously—and understandably so, as doing so would greatly undermine theaters’ ability to make money on those films.


But covid-19 has created a situation where theaters are already in a bad spot when and if they’re able to reopen. Reopening will likely come with capacity restrictions, and even people who once went to the movies regularly prior to the closures may be hesitant about returning—even with new precautionary measures in place. The present situation has also put the studios behind those theaters in a weird spot. Some have pushed their big budget releases into 2021, a move that at present seems highly optimistic. Others, like Universal, have released films on-demand, as was the case with Trolls World Tour, which was apparently watched by virtually everyone and managed to rake in nearly $100 million in three weeks.


And where’s the largest studio in the U.S? Disney is watching the situation carefully. In an earnings call this week, new Disney CEO Bob Chapek said the company has “realized that either because of changing and evolving consumer dynamics, or because of certain situations like covid, 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 anybody needs to be financially viable. So we’re going to evaluate each one of our movies on a case-by-case situation, as we are doing right now, during this coronavirus situation.”

However, unlike Universal, Disney watched its words. Chapek noted that Disney “very much believe[s] in the value of the theatrical experience overall to launch blockbuster movies.” In other words, a wink-wink promise not to screw theaters on those tentpole productions. Disney is a titan at the box office and alone accounted for roughly 40 percent of the U.S. box office last year. And while Disney is certainly making itself sound like a benevolent good faith actor, Disney has already shown that it has no problem using its power to set unreasonable terms for theaters, particularly for smaller ones.

What’s interesting is that Disney+ has become a veritable Goliath too, and in a relatively short amount of time. Disney claims its subscriptions have ballooned to nearly 55 million. To give an idea of how significant that figure is, Netflix has roughly 70 million U.S. subscribers.

What that means is that Disney absolutely has the eyeballs and the demand—particularly now, with so many families at home—to make PVOD releases on Disney+ a priority if it wants to. As Chapek noted on the earnings call, Disney is currently testing the waters of this release format with Artemis Fowl, a decision Chapek said was made primarily because of the demographic appeal. In the meantime, Disney has moved all of the theatrical release dates for its other tentpole productions.


It’s difficult to know what the landscape will look like by the end of this month, much less three months or even a year from now. For now, however, Disney doesn’t appear willing to drive the final nail into the coffin for movie theaters just yet.