Disney’s decades-long dominance of Hollywood was once the gold standard for consistent success in a notoriously unstable industry. But it turns out even Disney cannot quite figure out the formula to solve the industry’s massive problem with streaming services.
Since Netflix’s revolutionary business model made it easier than ever to consume quality content at home, studios had to figure out what that meant for the future of their content. The answer was to build their own streaming services to cut out the middleman (Netflix) from profiting off their native content. At first, it seemed like streaming and theatrical content could coexist and create new opportunities throughout the industry without sacrificing old forms of distribution.
Enter: The Covid-19 Pandemic
Following March 2020’s economic shutdown that crippled theaters and restricted the release of theatrical content already in the pipeline, the investment that Disney and other studios made to build their streaming services paid off big time. Disney crossed 100 million subscribers four years ahead of its projections due to the demand for the blockbuster content that Disney+ provides. But in addition to the Marvel and Star Wars streaming shows that Disney produced exclusively for streaming, Disney took a risk by sending some of its theatrical content to the service using Premier Access, an original business model exclusive to Disney+.
Disney+ Premier Access originally began as Disney’s temporary distribution platform while theaters recovered from the pandemic. Current Disney+ subscribers had the option to pay an additional $29.99 on top of their subscriber fee to unlock the ability to watch theatrical content at home. To date, only five films have used this distribution method: Mulan, Raya and the Last Dragon, Cruella, Black Widow, and Jungle Cruise.
Although Disney has no projects currently lined up for it, does Premier Access have a potential, long-term future at Disney? The answer has become increasingly complicated with recent developments within the company and across the industry.
First, there was Scarlett Johansson’s controversial lawsuit over backend participation for Black Widow. Under a typical theatrical distribution model, A-list talent make a bulk of their earnings based on box office performance, resulting in multimillion-dollar paydays for these individuals. The streaming model does not account for this.
Although Disney claimed Johansson earns a portion of the Premier Access revenue, having an at-home option in the first place inevitably puts a dent in box office revenue from massive drops in its long-term business. Black Widow opened with an $80 million opening weekend, which is incredible for pandemic standards, but slightly below average for a typical Marvel movie. Its second-weekend drop of 68%, the largest drop for any Marvel movie, is the real issue. Although Disney and Johansson have since reached an agreement and settled the case out of court, the complex questions about the pandemic box office still stand.
Black Widow did make up for its lack of longevity at the box office with around $125 million from Premier Access alone. From Disney’s perspective, Premier Access revenue is more valuable than the box office’s because the studio only splits about 15% of this revenue with platform providers like Amazon Fire Stick and Apple TV compared to the typical 50/50 (ish) split with theaters. But Disney using its new streaming platform to release projects meant for theaters creates many unanswered questions about how the traditional studio/talent relationships could survive.
This issue is not limited to Scarlett Johansson or Disney. High-profile talent like Christopher Nolan and Patty Jenkins have been vocal about their disappointment in Warner Bros. potentially sending their projects to HBO Max. Nolan recently abandoned his long-term relationship with Warner Bros. to protect his next project’s theatrical release.
This potential shift impacts everyone in the industry, top to bottom. It could approach the point of the industry’s major unions going on strike if studios do not adapt to more lucrative deals with talent. But it’s difficult to predict what the industry could look like post-pandemic, especially after studios now have so much invested in these streaming services.
Ideally, the industry would bounce back to the separation of theatrical and streaming content like the pandemic never happened, but it would not be that easy to return consumers to standard patterns without creative remediation. Marvel’s Shang-Chi and the Legend of the Ten Ring’s and Sony’s Venom: Let there be Carnage recently showed promising signs that the domestic box office is recovering, particularly for exclusive theatrical releases, but its numbers are still not back to pre-pandemic levels.
It seems the industry could be settling on a middle ground of shortening the traditional 75-day window to around 45 days. Will this change be temporary or permanent? Only time will tell. Still, at this point, it’s abundantly clear that unless Disney wants to bulldoze its talent and suffer the legal and public nightmare that follows, Premier Access cannot continue without significant changes to the way the company structures its business relationships.