It will be a long time before a film replaces Pixar’s latest release as the top box office draw, and the industry itself will be dramatically different when that happens.
It will be weeks and possibly months before a rival studio knocks Disney‘s (NYSE:DIS) Onwardfrom the top of the box office, but that isn’t a compliment. Movie theaters across the country closed down early last week, cementing Onward on top after a pair of lackluster weekends where it reigned supreme at the top facing uninspiring competition.
Onward is unlikely to come back to the local multiplex when theater chains fire up their projectors again. Like other studios, Disney has taken the bold step to push the film into retail digital distribution. It’s available for purchase across all of the leading online marketplaces for $19.99, and two weeks from now it will be available to stream for Disney+ subscribers.
Some quests aren’t magical
You can’t go back into theaters after a lackluster run on the silver screen and broad retail distribution. When multiplex operators reopen in the spring or summer, it will be with a fresh slate of films. Onward will retire collecting $61.6 million in domestic ticket sales, Pixar’s biggest dud by far as a theatrical release. Based on the industry’s current prices, this translates into less than 7 million tickets sold in the U.S., so if you did see Onward in its brief theatrical engagement, consider yourself in rare company, as just 2% of the country saw it before exhibitors went dark.
Onward‘s returns will be footnoted, of course. It had less than two weeks to strut its stuff. The computer-animated film had no problem drumming up critical praise, with a healthy 87% approval rating from film critics and an even 95% score from viewers polled by reviews aggregator Rotten Tomatoes.
The timing is still lousy. A few years ago, a film could recover with strong DVD sales, but folks aren’t buying optical discs the way they used to. There will be a fair number of people paying almost $20 for the digital release, but probably not as many as you might think. Even as most of the country is hunkering down at home and hungry for fresh digital content, this is a film that will be available at no additional cost to stream for the nearly 30 million Disney+ subscribers on April 3. If you’re a fan of Disney and Pixar, there’s a good chance you’re already a Disney+ member. If you waited two weeks without seeing it at movie theater — like 98% of us — you can wait another two weeks now.
The movie industry was already changing before the historical disruption. Folks aren’t going to the corner multiplex, and that’s bad news for Disney. It put out all six of last year’s highest-grossing movies, but even a hit factory will suffer if no one goes to the movies.
COVID-19 has rattled the movie studio industry, and we’re not just talking about the current outage. Disney isn’t the only studio turning to digital delivery in lieu of a theatrical release for films that can’t simply be pushed out later into the year. Rival Comcast (NASDAQ:CMCSA) is offering 48-hour digital rentals of first-run releases at a stiff $20 price tag. If consumers take to digital delivery — or if they realize they no longer need movie theaters in the distribution ecosystem — this is one industry that may operate materially different at the other end of this coronavirus crisis.
With consumers bracing for a recession and film budgets inching higher, something has to give. Disney’s studio subsidiary will inevitably take a one-time charge on Onward this fiscal year, but the real hit may be to the state of the industry itself.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.