Artemis Fowl, a movie that cost $125,000,000 in production alone, hit Disney+ on 12 June 2020. This represents a move that people thought was a way off for Disney, putting big budget franchise entries straight to the service instead of trying to recoup their money at the box office.
Might I remind you that its release date was pushed back by over one year partly because of the hype surrounding Endgame. Each time a movie is delayed, it costs the releasing studio a lot of money. Some estimates place James Bond’s No Time To Die as costing MGM in the region of $30M – $50M, and that’s for a 7 month delay. The costs associated with delaying a movie can vary, and Hollywood budgeting is infamously opaque, but you can expect added labour in editing new trailers (somewhere north of $200,000), then paying marketing teams to analyse the best time to release said trailers, then paying for the ad spots across all media. Then, you may have additional costs if the director decides that some things may need to be adjusted. Not to mention the fact that there could be fiercer competition for bums on seats because of the time they’ve chosen to release it, which could result in lower box office gains.
All of this to say, delaying a movie is expensive. Yet, with a delay of 1 year, Artemis Fowl never saw a theatrical release. Why is that? Could they have delayed the movie even more in order to try and recoup some of the funds, despite it not being able to breakeven?
To answer that question, we need to look at two things:
- How is Disney+ priced?
- Do those people pay monthly or annually?
Using data obtained from Android Central, the average monthly price across all locations that Disney+ is available in clocks in at around about $7.32. The average annual cost clocks in at around $72.21 which, breaking it down even further, is a monthly cost of about $5.55. Making some huge assumptions, namely that the number of people paying annually and the number of people paying monthly are equal, the amount of monthly revenue from Disney+ from each individual subscriber is about $6.44.
Disney last released its subscriber numbers when the service launched in India, and it was above 54,500,000. It also recently launched in Japan, so even if it only gained 10% more subscribers than it had since last reported, Disney is raking in $385,918,133 EACH MONTH (this is a very conservative estimate), just from Disney+. Even with Disney’s billion-dollar hits, it took in revenue of around about $4.7B from theatrical releases last year (because studios usually split the gross 50/50 with theatre chains). If you were to extrapolate the monthly revenue that Disney+ brings the company for a whole year, you’d get to $4.6B, and that’s with the generous presumptions I’ve made and with it not launching in any more countries than already stated. (I’ll get to why this is important very soon).
Disney+ is basically the company printing its own money. That $4.7B in revenue from 2019 was bearing in mind Avengers: Endgame (the highest grossing movie of all time), The Lion King, Frozen II, Toy Story 4 and Aladdin, and taking into account the largest contributor: China. Disney can get close to that every single year by just making sure there’s enough new, high quality content to keep people hooked on the service. This is where Artemis Fowl comes in.
Before you think I’m going to praise it, I’m not. It was an awful waste of 90 minutes of my life and you shouldn’t even bother with it. Whilst people in the UK grew up reading those books, and people in the US viewed it through Harry Potter Goggles (the goggles that make anything by a British author gain a cult following), there was an unusually high demand for the service in… Japan. When Disney announced they were putting Artemis Fowl on the service, there was no release date attached initially. Soon after, they confirmed that they would be launching the service in Japan in June. They announced soon after that Artemis Fowl was launching on Disney+ on 12 June. Then, a couple of weeks later, they announced that Disney+ would be available in Japan on 11 June.
They knew exactly what they were doing. They were using the release of a movie with a high demand to entice potential subscribers in that region to join the service. It’s an extremely clever way of doing things. For reference, here are the search trends for the term “Artemis Fowl” in both the US and Japan; as you can see, Japan has had more consistent interest for a much longer time.
I think that this is how Disney will release its big movies in the future. I also think that we need to pay attention to huge future markets in which it hasn’t launched, the biggest of these being Brazil, where it’s set to launch in November 2020. Are there any big Disney films set to come out in November with a budget comparable to Artemis Fowl’s? I ask, sarcastically of course, because the one Disney movie that almost everybody in the world was looking forward to seeing this year comes out in November 2020 in theatres: Black Widow (budget: $150,000,000+).
Looking at the trend search again, we can see that Black Widow has two large peaks in Brazil over the past 12 months. It looks like Disney is going to pull the same trick with Black Widow to rope in Brazilian subscribers. Within that time, however, Disney+ will have launched in most of continental Europe, the Nordics, and the French overseas territories, giving them a conservative additional 1,000,000 subscribers. Back to the numbers, I won’t bore you with the monthly figures etc. again, but we’re at the magic number: $4.7B, without even launching in China. Again, this is an extremely conservative figure because Japan has a population of over 126M; presuming that only 5 million will subscribe to Disney+ is a complete underestimation. This is especially true when over 90% of the population in Japan have internet access and, with the percentage of people in Japan using streaming services increasing year on year, it’s very likely that the number of Disney+ subscribers in Japan will work out as a lot higher.
The reason I mention population is because of Brazil, which has just over 220,000,000. That is to say, a little under double that of Japan. Funnily enough, the percentage of internet users in Brazil is half of Japan’s, with a little almost 50% of Brazil having internet access. What I’m trying to get at here is: Japan and Brazil are both absolutely huge markets and we need to pay close attention to the numbers and dates.
I could honestly see Disney having an exit strategy from the economic effects of the virus by deciding to launch Black Widow on Disney+ instead of delaying it even further. They’ve specifically chosen to launch in Brazil in November for that very reason because, once they do, even if only 1% of Brazil’s population subscribes to the service and keeps it for one month, Disney makes over $406M for that month. Extrapolating that for the year and Disney+ will make the company $4.8B in revenue. But, as always, it doesn’t end there. By the end of this year, Disney+ will launch in all of Latin America, most likely in December to coincide with the release of WandaVision. I’m not even going to get into the numbers for that because my brain, and probably yours too if you’re still reading this far in, hurts. The bottom line is this: in one year of service, Disney+ will already be a much bigger money-maker than Disney’s highest-grossing year at the global box office, and that’s not even considering the bane of my life: Hulu.
In 2021, Disney plans to launch the service in sub-Saharan Africa, and I wouldn’t be surprised if they tackle more of Asia. If, somehow, they could get Disney+ in China, they would be the first major streaming service to be able to successfully break into the Chinese market and that’s a huge deal. Next year, they also plan on launching Hulu internationally (although recent reports would suggest it’s not in their short-term goals anymore, thanks ‘rona).
Disney’s strategy moving forward is incredibly simple, and incredibly brilliant:
- Hold off launching in major markets (Japan, Brazil, SE Asia, Lat-Am);
- Release big-budget crowd-pleasers on Disney+ to get an influx of new subscribers;
- Keep a hold of those subscribers with a low monthly cost;
- Slowly phase out theatrical releases;
- Invest swathes of money on high-quality original content to bring in even more subscribers;
Disney+ is the future of how Disney will release its movies because you can’t have a “box office flop” if you don’t release it at the box office. Studio entertainment isn’t even The Mouse’s largest source of revenue, merchandise and parks are. The latter of these obviously has a larger operating cost but the merch is sold at an almost extortionately high mark-up. The fact that Disney wasn’t worried about a direct loss with Artemis Fowl of over $125,000,000 suggests that the hundreds of millions it makes each month from Disney+ justifies that. If Artemis Fowl made it into theatres, Disney would lose money instantly and wouldn’t be able to recoup most of it until about 6 months later because it has to be released on home media after a 3-month wait, then it would have to wait a few more months before it’s eligible for streaming. My UK folk know what I’m talking about (Frozen II).
You might be asking: “But wasn’t Onward released in theatres and then put on Disney+ in some territories?” And, to that I say: “Yes, but think of how many people subscribed to Disney+ simply to watch it?” Sure, Disney must’ve bought out of its existing contracts to expedite its debut on the platform, but the number of new subscribers + the low cost of the service + the people who decide to keep their membership past the free trial = an open and shut case. I highly doubt that Disney expected people to actually enjoy Artemis Fowl, I think it was probably the world’s most expensive advertisement because the people who signed up just to watch that most likely said “I’ll see what else is on here”, and then their week’s free trial is over and they’ve just been billed. By releasing huge movies on the service, and when I say huge, I mean in terms of budget, Disney offsets the potential box office gains and losses by having millions of people come for that movie and stay for the promise of more like it.
In summary, Disney just doesn’t care about the box office anymore. With this service alone, they’re able to meet and exceed the amount in revenue that they made last year from the global box office, without the service even being available in China. Why would they try to play nice with theatre chains when they can control the distribution, timing and release of their films? Moreover, Disney simply does not produce “cinematic” movies in the sense of revolutionising the craft filmmaking, which isn’t a bad thing at all, it just means that you don’t need to watch Disney movies in IMAX with Dolby on a huge screen to enjoy it as the filmmaker intended. A good home theatre set-up, or even just an average one, is all that you really need to enjoy movies the way that Disney intended.
Thank you all so much for reading. If Disney decides to go all-in on Disney+, do you think we’ll start to see a shift away from theatrical releases altogether? Let me know in the comments!
This article is the opinion of the author and not necessarily the opinion of DisneyPlusInformer.com