Encanto Projection coming to "it's a small world" façade April 11th

[Phroobar]

Okay. But did they actually make $1.3 Billion off of Encanto?

I'm still waiting for someone to explain to me how monthly streaming services for $8 per month per household replaces actual ticket sales of $15 per person at movie theaters. So a family of four can watch Encanto unlimited times in 2022 for $8, whereas that same family of four would have spent $60 to see Encanto once in a movie theater in 2019.

I'm no math whiz, and I'm not a hip movie executive with my pronouns in my Twitter bio, but it seems to me that Disney just lost out on $52 per American household by endlessly streaming Encanto to their TV for 8 bucks rather than making them pay 15 bucks per person to see it once in a real movie theater.

Realizing Hollywood is a for-profit business in a Capitalist society, how does this new $8 per month streaming business model work long term again?

From what I can see it comes down to merchandising. "Where the real money from the movie is made." Disney is willing to show the movie via streaming in order to sell stuff based on the movie. Netflix makes money via product placement within their original content and licensing the IP.

 

[TP2000]

From what I've read, throwing the movies into Disney+ is a move to shore up that product. The company has entered the streaming wars and wants to compete with the heavy hitters, especially Netflix, and that can sometimes mean losing revenue at the box office. It's been touted to investors as a big part of the future of the company, so that's also part of it. Also, Disney+ subscriptions plateaued once people started going out/traveling again, and was not meeting quotas set on pandemic-height-level expectations. So throwing the big hits in there gets more subscriptions and, hopefully, many of those keep the subscriptions because they enjoy the rest of the content/bought an annual subscription/forget to cancel.

I get that streaming is "the future". I don't have Disney+, but I do enjoy Amazon Prime shows, but only because I have Amazon Prime for the shipping services.

I just can't pencil it out in my head how Disney can keep spending $100 Million to $200 Million on making these big animated pictures through Pixar or Walt Disney Animation only to throw them on Disney+ for "free". If American families can now see these movies multiple times for $8 instead of $60 per viewing, there's $52 missing from that business model.

Disney is losing 80% of its profits per movie by doing that. That can't continue much longer, especially now that the pandemic is effectively over.

 

[Disney Analyst]

I get that streaming is "the future". I don't have Disney+, but I do enjoy Amazon Prime shows, but only because I have Amazon Prime for the shipping services.

I just can't pencil it out in my head how Disney can keep spending $100 Million to $200 Million on making these big animated pictures through Pixar or Walt Disney Animation only to throw them on Disney+ for "free". If American families can now see these movies multiple times for $8 instead of $60 per viewing, there's $52 missing from that business model.

Disney is losing 80% of its profits per movie by doing that. That can't continue much longer, especially now that the pandemic is effectively over.

It really comes down to new sign ups and retention. If Disney gets x amount of sign ups from releasing Encanto on Disney+, and those people do a mix of annual or monthly plans, and stick around… it’s a win for Disney.

Retention, new sign ups. Name of the game.

But of course, strategy will also change now that movie theatres are pretty much fully open in North America.

 

[Phroobar]

I get that streaming is "the future". I don't have Disney+, but I do enjoy Amazon Prime shows, but only because I have Amazon Prime for the shipping services.

I just can't pencil it out in my head how Disney can keep spending $100 Million to $200 Million on making these big animated pictures through Pixar or Walt Disney Animation only to throw them on Disney+ for "free". If American families can now see these movies multiple times for $8 instead of $60 per viewing, there's $52 missing from that business model.

Disney is losing 80% of its profits per movie by doing that. That can't continue much longer, especially now that the pandemic is effectively over.

As I've said, most of a Disney movie returns come from merchandise. Just look at all the crap for sale in the World of Disney for Encanto and Turning Red. It's the same reason they built attractions. They spent hundreds of millions on Space Mountain but they make it back in people coming to the park.

 

[truecoat]

So what?

Best animated Oscar always goes to Disney/Pixar.

They only won half the first 10 years of the category so it didn't always go to Disney/Pixar.

 

[Phroobar]

They only won half the first 10 years of the category so it didn't always go to Disney/Pixar.

 

[No Name]

I'm still waiting for someone to explain to me how monthly streaming services for $8 per month per household replaces actual ticket sales of $15 per person at movie theaters.

I’ve tried explaining that a couple of times to you, I’m still waiting for you to understand it!

 

[truecoat]

I get that streaming is "the future". I don't have Disney+, but I do enjoy Amazon Prime shows, but only because I have Amazon Prime for the shipping services.

I just can't pencil it out in my head how Disney can keep spending $100 Million to $200 Million on making these big animated pictures through Pixar or Walt Disney Animation only to throw them on Disney+ for "free". If American families can now see these movies multiple times for $8 instead of $60 per viewing, there's $52 missing from that business model.

Disney is losing 80% of its profits per movie by doing that. That can't continue much longer, especially now that the pandemic is effectively over.

120 million+ subscriptions at 8 bucks a month is roughly equal to 2019's Disney box office pre-pandemic. Money that isn't shared with theaters. How many more kids see these animated films that might not have otherwise. If it sells more merch and shores up Disney+ offerings, it has to be worth it.

 

[HigitusFigitus!]

I will say, I don't think movie theater experiences will go away entirely. It's quite different than watching at home and many people will still likely be willing to pay up for the experience. But I think it will continually become a smaller part of revenue stream for movie makers.

 

[TP2000]

I’ve tried explaining that a couple of times to you, I’m still waiting for you to understand it!

There's 43 million subscriptions to Disney Plus in the US and Canada. Another 42 million in the UK and Europe.

That's 344 Million bucks per year in North America.

And 336 Million bucks per year in Europe.

Pre-pandemic, Disney's combined Pixar and other studios were making a lot more in theater box office than that in each market.

There's money missing if they are only charging an American family $8 to stream Encanto in 2022, compared to the $60 that same family paid to see Moana in a theater in 2018.

 

[truecoat]

I will say, I don't think movie theater experiences will go away entirely. It's quite different than watching at home and many people will still likely be willing to pay up for the experience. But I think it will continually become a smaller part of revenue stream for movie makers.

I totally agree. I love going to the movies and seeing a movie on the big screen with an audience and no distractions can't be duplicated at home.

 

[Disney Irish]

There's 43 million subscriptions to Disney Plus in the US and Canada. Another 42 million in the UK and Europe.

That's 344 Million bucks per year in North America.

And 336 Million bucks per year in Europe.

Pre-pandemic, Disney's combined Pixar and other studios were making a lot more in theater box office than that in each market.

There's money missing if they are only charging an American family $8 to stream Encanto in 2022, compared to the $60 that same family paid to see Moana in a theater in 2018.

Here is the reason why the math will work out for D+:

Disney+ to Introduce an Ad-Supported Subscription Offering in Late 2022

In a first for Disney’s premier direct-to-consumer streaming service, Disney+ will expand its offerings for consumers by introducing an ad-supported s

www.businesswire.com

D+ just like Hulu will start having ad revenue for lower tiers later this year. So this will offset, and likely turn a profit quickly, any content they move to D+ that didn't go to theaters or have a short run in theaters.

Don't want ads, well you pay more, meaning more ARU (average revenue per user) for Disney.

Point is Disney knows better than anyone here how to squeeze money out of consumers for their movies, even in a streaming service.

 

[No Name]

There's 43 million subscriptions to Disney Plus in the US and Canada. Another 42 million in the UK and Europe.

That's 344 Million bucks per year in North America.

And 336 Million bucks per year in Europe.

Pre-pandemic, Disney's combined Pixar and other studios were making a lot more in theater box office than that in each market.

There's money missing if they are only charging an American family $8 to stream Encanto in 2022, compared to the $60 that same family paid to see Moana in a theater in 2018.

You’re still completely failing to understand the greater value of the service for Disney. What Disney gets is not only a monthly payment but an active customer and a direct channel through which they can push something to that person or people. It’s about building a subscriber base. The next huge original hit, the next Toy Story or Star Wars or Encanto, can’t and won’t be from theaters, it’ll be on a streaming service, and you need a subscriber base to make that happen. Encanto was in theaters and it didn’t even break even. And it did much more financially for the company on Disney+.

You keep doing math (incorrect math) as if it’s supposed to provide a direct return, when it’s actually an investment. If Bob Chapek is capable of understanding long-term business value I’d hope you are too.

 

[Parteecia]

There's money missing if they are only charging an American family $8 to stream Encanto in 2022, compared to the $60 that same family paid to see Moana in a theater in 2018.

A quick google told me that the studio gets 50%. But yeah that's still $30 vs $8. But that model works for Netflix somehow (I don't know how).

I love going to the movies and seeing a movie on the big screen with an audience and no distractions can't be duplicated at home.

I have learned to love watching at home. No travel, no ads, no idiots talking or with their phones lit, on my schedule in my recliner with a big-enough screen and I control it all, including the temperature and volume and captions if I feel like it. Ahhh.

If I want a bigger screen I'll move my recliner closer.

 

[TP2000]

You’re still completely failing to understand the greater value of the service for Disney. What Disney gets is not only a monthly payment but an active customer and a direct channel through which they can push something to that person or people. It’s about building a subscriber base. The next huge original hit, the next Toy Story or Star Wars or Encanto, can’t and won’t be from theaters, it’ll be on a streaming service, and you need a subscriber base to make that happen. Encanto was in theaters and it didn’t even break even. And it did much more financially for the company on Disney+.

Well, okay. I guess if everyone is just so convinced that films that cost $150 to $300 Million to produce and market and then streaming them to American houses for only 8 bucks a month is a winning business strategy, then so be it. But I just can't wrap my head around how it pencils out mid to long term, especially post-pandemic, at least not when movies cost hundreds of millions to produce and market.

If they get the cost of doing big tentpole Summer/Christmas movies down to sub $100 Million, or around $50 Million, then I can see it penciling out at 8 bucks a month. But there's a whole lot of wealthy celebs and execs and hangers-on in Hollywood who aren't going to like those pay cuts that new business model demands.

You keep doing math (incorrect math) as if it’s supposed to provide a direct return, when it’s actually an investment. If Bob Chapek is capable of understanding long-term business value I’d hope you are too.

I hate math.

But I thank you for giving me the benefit of the doubt to think that I'm smarter than Bob Chapek!

 

[TP2000]

A quick google told me that the studio gets 50%. But yeah that's still $30 vs $8. But that model works for Netflix somehow (I don't know how).

I don't know how it works for Netflix either.

It's just easier for me to be baffled over streaming Disney films for 8 bucks a month, because there is decades of precedence for a big smash Disney hit to cost $300 Million to produce and market, then bring in a Billion in box office in the first eight weeks. A few hundred Million to the theater owners, fifty Million or so to the big stars that had a contract delivering a slice of the profit, and the last $300 or $400 Million of profit goes into Disney's account at the beautiful downtown Burbank branch of Bank of America.

At least that's how it all worked until March, 2020. But now....???

The Netflix business model baffles me. I just have to assume it's like Uber and other new businesses, where it's being underwritten by massive amounts of murky venture capital and they take the gamble that it won't make a dime for the first five years and then it starts earning some dough. Or not. But please don't let the Netflix business model collapse until they release the very last season of The Crown!

It's all way beyond my pay grade. I'll just bring a nice bottle of wine to share to the next big Disney or Pixar mega-hit and settle into the reclining lounge chair next to you, if you don't mind.

 

[Disney Irish]

You’re still completely failing to understand the greater value of the service for Disney. What Disney gets is not only a monthly payment but an active customer and a direct channel through which they can push something to that person or people. It’s about building a subscriber base. The next huge original hit, the next Toy Story or Star Wars or Encanto, can’t and won’t be from theaters, it’ll be on a streaming service, and you need a subscriber base to make that happen. Encanto was in theaters and it didn’t even break even. And it did much more financially for the company on Disney+.

You keep doing math (incorrect math) as if it’s supposed to provide a direct return, when it’s actually an investment. If Bob Chapek is capable of understanding long-term business value I’d hope you are too.

Well to be clear it should be said that the first couple of years was about gaining subs quickly. And then after that is to continue to gain more subs by going into other regions, plus also keeping existing subs.

The math for content is not a 1-to-1 relation in this type of situation, as the sub rate is not applicable to one single piece of content but to all content on the service. So cost of content is written down over time, not all at once like in a traditional theater release model. I think that is where TP is having trouble figuring it out how the math can work. It throws the traditional Hollywood release model on its head, because studios never had to wait years for recouping the cost of content, it was always 1-to-1. What it does is turn Studios into tech companies where future revenue pays for past development over time.

This is where the ad based tier is going to become important for D+, as that offsets content cost quicker rather than waiting years to write down the cost of content.

 

[Practical Pig]

It's just easier for me to be baffled over streaming Disney films for 8 bucks a month ...

I've been struggling to understand this new market as well (and the rest of the new post-pan world around it). But I wonder how many families there were that subscribed to Disney+ to watch Encanto at home for eight bucks instead of sixty that now will be paying that eight bucks over and over every month for years ahead. How many families will the next major title released on on Disney+ bring in?

 

[Disney Irish]

I don't know how it works for Netflix either.

It's just easier for me to be baffled over streaming Disney films for 8 bucks a month, because there is decades of precedence for a big smash Disney hit to cost $300 Million to produce and market, then bring in a Billion in box office in the first eight weeks. A few hundred Million to the theater owners, fifty Million or so to the big stars that had a contract delivering a slice of the profit, and the last $300 or $400 Million of profit goes into Disney's account at the beautiful downtown Burbank branch of Bank of America.

At least that's how it all worked until March, 2020. But now....???

The Netflix business model baffles me. I just have to assume it's like Uber and other new businesses, where it's being underwritten by massive amounts of murky venture capital and they take the gamble that it won't make a dime for the first five years and then it starts earning some dough. Or not. But please don't let the Netflix business model collapse until they release the very last season of The Crown!

It's all way beyond my pay grade. I'll just bring a nice bottle of wine to share to the next big Disney or Pixar mega-hit and settle into the reclining lounge chair next to you, if you don't mind.

What you are calling "the Netflix business model" is actually older than Netflix, its how tech companies have been doing business for over a hundred years. So its a model that works.

And just an FYI, Netflix has been profitable for many years now, so its not going to collapse.

 

[TP2000]

I've been struggling to understand this new market as well (and the rest of the new post-pan world around it). But I wonder how many families there were that subscribed to Disney+ to watch Encanto at home for eight bucks instead of sixty that now will be paying that eight bucks over and over every month for years ahead. How many families will the next major title released on on Disney+ bring in?

Good point. And maybe that's the secret to all this mystery.

But the average American family of four has to subscribe to Disney+ for eight months in the 2020's to equal the box office ticket sales to one (1) movie in the 2010's.

Someone else can do the math on that. But just using my fingers, with each finger equaling 8 dollars, it doesn't seem to make financial sense.