Why is Disney streaming Pixar movies directly?

Disney’s upcoming animated fantasy comedy “Turning Red” hits the big screen, marking the third Pixar film in a row to debut directly on Disney Plus.

By the time “Turning Red” hits the streaming service on March 11, it will be two years since a Pixar film – director Dan Scanlon’s magical adventure “Onward” in 2020 – has been played in theaters north. Americans. The decision to continue relegating Pixar movies, arguably the gold standard of child-friendly tariffs, straight to streaming has been confusing for industry watchers and downright frustrating for beleaguered cinema operators, who rely on them. family movies to keep the cash registers ringing between the onslaught of glasses superheroes.

Yes, there is still a raging pandemic. Yes, Disney Plus needs new content to increase its subscriber base. And yes, the family audience – Pixar’s target demographic – haven’t been eager to return to theaters.

But Disney has not kept all animated films away from theaters since the start of COVID-19. During the same time period as two Pixar films, the existential drama “Soul” and the Italian adventure “Luca” have completely skipped theaters to debut on Disney Plus, Disney Animation‘s “Raya and the Last Dragon” has landed simultaneously in theaters and on Disney Plus for a premium fee of $ 30, while another Disney Animation feature, the musical fable “Encanto,” was available exclusively in theaters for 30 days.

So what exactly does Disney have against letting Pixar movies play on the big screen?

Box office experts say Disney doesn’t continually deny Pixar films a proper theatrical release to be punitive. They think it has more to do with the animation empire’s enviable streak of critical and commercial triumphs including “Toy Story“, “Finding Nemo”, “Ratatouille”, “Up” and “Coco”. Box office revenue is significant, but Disney is also keen to maintain and increase the number of people who pay to use Disney Plus. That’s not to say that other Disney movies aren’t useful in bringing eyes and credit cards to the streaming service.

But Disney sees Pixar’s value for its intergenerational appeal. It’s not just for parents with kids; there is a young adult fan base who grew up on the adventures of Woody, Buzz Lightyear, Nemo and Dory. Disney does not disclose streaming data on individual titles, so it is not known whether “Soul” and “Luca” had an impact on Disney Plus. But the studio has experimented enough between exclusive theatrical releases, hybrid deployments, and Disney Plus-only debuts to figure out how to maximize revenue while also boosting its subscriber base. For analysts, this means that Pixar streaming-exclusive titles need to be particularly resistant to churn, a term referring to the percentage of service subscribers who cancel their monthly subscriptions, in addition to increasing the number of subscribers.

“It has nothing to do with the quality. It’s about making a daring game with their best chess piece, ”says Jeff Bock, media analyst at Exhibitor Relations. “The fact that they did it with three films in a row leads me to believe that it really helps. “

When announcing the premiere of “Turning Red” direct to Disney Plus, studio director Kareem Daniel spoke about the need to respond to Disney Plus subscribers, as well as the delayed box office resumption for family films.

“Disney Plus subscribers around the world have enthusiastically embraced Oscar-winning Pixar’s ‘Soul’ and critically-acclaimed ‘Luca’ at their exclusive premiere on the service, and we look forward to bringing them the next feature film. Pixar’s incredible ‘Turning Red’, ”Kareem Daniel, president of Disney Media and Entertainment Distribution, said in a statement last week.“ Given the delayed box office resumption, especially for family films, the flexibility remains central to our distribution decisions as we prioritize bringing the unparalleled content of The Walt Disney Company to audiences around the world. “

Analysts don’t believe the fast-spreading omicron variant of COVID-19 will keep people at home, and therefore away from the movies, forever. When the peak of cases eventually subsides, family films – a genre that made more box office money than any in 2019 – will be key to the theater industry’s recovery.

“By March, would the public be more willing to go to the movies? I think so, ”says Eric Handler, Wall Street analyst who covers media and entertainment at MKM Partners. “It’s clear that Disney Plus always remains a priority.”

Yet other film industry watchers can’t help but wonder why “Turning Red” hasn’t maintained at least some semblance of a theatrical window. Aren’t muted ticket sales better than none at all? In theory, yes. Putting a movie directly on demand reduces downstream revenue, like traditional premium video on demand rentals.

“In a healthy market, theatrical release is just the locomotive pulling the train,” says David A. Gross, who heads movie consulting firm Franchise Entertainment Research. “There is the purchase of home entertainment, streaming, free TV, merchandise, theme parks. [and] Licence, [adding] hundreds and hundreds of millions of dollars per movie.

But putting a Pixar film in theaters doesn’t come cheap. The studio’s films typically cost between $ 175 million and $ 200 million to produce and $ 100 million to promote. Taking that kind of swing, even for a studio as big as Disney, is a gamble in the midst of the hectic box office revival. It is significantly more expensive to market a movie in theaters compared to streaming releases.

After the box office outlook started to improve last fall, Disney opted to premiere budgeted $ 150 million “Encanto” in theaters only. Since its debut around Thanksgiving, the film has grossed $ 92 million in North America and $ 215 million at the global box office. Those ticket sales may be lower than the studio would have hoped to earn under normal circumstances, but that’s not bad for COVID times. However, it hasn’t been encouraging to Hollywood studios that a single animated film, Universal and Illumination’s musical “Sing 2”, has managed to surpass $ 100 million at the domestic box office since 2019. Had “Turning Red,” a comedic take on a teenage girl who suddenly transforms into a giant red panda whenever she feels too much emotion, replicated these results, the film would have struggled to balance in the air. box office.

For a long time, Marvel and Pixar were Tiffany’s two brands in terms of ticket sales, fostering an association with consumers that seemed to guarantee success. In Pixar’s case, this allowed the family studio to take bold artistic risks, like the near-silent “Wall-E” and the metaphysical comedy “Inside Out,” which nonetheless brought in big profits. But the reality is that even before the pandemic, the Pixar brand didn’t look so resilient. Granted, he still has a better record than most, but the studio suffered big losses with 2015’s “Onward” and “The Good Dinosaur” and had made a bigger effort to balance their roster with sequels to “Finding Nemo”. “,” Monsters, Inc. “and” The Incredibles. “There is also more competition on the animation front from Disney’s own animation arm and Universal’s Illumination Entertainment and DreamWorks Animation. Paramount and Sony also starting to invest heavily in the genre, it is only a matter of time before the market risks becoming oversaturated with child-centric images.

Flexibility, as Disney’s Daniel noted in his previous statement, has been at the heart of Disney’s box office strategy in the era of the pandemic. The studio made film-by-film changes, so the next Pixar film that may or may not hit theaters is the “Toy Story” spin-off “Lightyear,” starring Chris Evans as the character who inspired the popular Buzz Figurine Lightyear, scheduled to open in June. Given its association with “Toy Story,” the next film seems tailor-made for the big screen. But analysts don’t necessarily bet the House that it will land in theaters.

“The market is still volatile,” says Bock. “The only thing to do is to keep testing.”

Don’t look for Pixar to be at the forefront of this kind of theatrical experimentation. For now, his future is mapped out on Disney Plus.

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