Let’s Get Down to Business: Disney’s shares reach a peak since coronavirus

August 20, 2020

2 min read

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What's going on here?

Disney has seen a record increase in share prices since March after the announcement of Mulan being released digitally on its streaming platform.

What does this mean?

Walt Disney Co. saw its shares spike by 8.8%, its highest close of the COVID-19 pandemic. This came shortly after the company announced its decision to offer its latest blockbuster film, a remake of Mulan, directly to Disney+ subscribers for a one-off fee of $29.99. The film will still premiere in cinemas in countries where Disney+, the company’s streaming service, has not yet been launched. 

Disney has been one of the worst-hit companies by the pandemic following worldwide closures of cinemas and its flagship theme parks. This is of particular importance to Disney as almost 40% of its revenues last year came from parks and resorts. COVID-19 has resulted in a $4.7bn loss by end of June, its first loss in two decades. Releasing Mulan digitally is an attempt to mitigate some of these losses.

What's the big picture effect?

Worldwide lockdown measures have forced almost all cinemas to close, prompting many studios to delay the release of major titles. These include Wonder Woman 1984, Marvel’s Black Widow and the newest Fast & Furious film, all of which are still hoping for a profitable theatrical release. Disney’s decision to release Mulan digitally is influential given the international studio’s power over the global box office. Just last year, it earned a record $13.2bn in ticket sales alone. 

Mulan is likely to be just an experiment. However, it does show the potential of Disney’s relatively new streaming service. Disney+ is only 10 months old and has already become Netflix’s main contender. It has surpassed 60 million subscribers, four years ahead of internal expectations. This has allowed the company to experiment with home releases during the lockdown to help mitigate its losses in ticket sales. 

Despite the relative success of the Mulan release, it is improbable that  we will see a huge change in the box office industry. Despite large immediate losses for both studios and cinemas, many countries lack developed streaming service usage for this option to be viable at the moment. One such example is China, which also happens to be the world’s second-largest box office market. While this move is unlikely to change big studios’ behaviour surrounding big-budget films, it may spark a submarket of direct-to-digital films. Though these digital releases have been good escapism from the pandemic, it is unlikely they will leave any lasting impression in the long term.

Report written by Andreea Dicu

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