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A Tale of Two Summer Blockbusters

By Rick Munarriz – Sep 4, 2020 at 10:00AM

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"Tenet" and "Mulan" finally square off this weekend, but they're playing different games.

Early in the pandemic, it seemed there were only two films that could save the day for the multiplex industry. Disney's (DIS 0.74%) Mulan -- originally slated for a late March release until theaters across the country closed down in mid-March -- repositioned itself for a July 24 debut. Tenet -- the handiwork of AT&T's (T -0.47%) Warner Bros. -- initially stuck to its July 17 premiere.

The rest of the summer's biggest releases got out of Dodge. Those films delayed theatrical premieres to late 2020, pushed back openings until summer 2021, or bypassed the movie house entirely with premium-priced digital streams.

Once it became clear that AMC Entertainment Holdings (AMC 13.00%) and the rest of the country's movie theater operators wouldn't open by July, AT&T and Disney chose different paths. Tenet got pushed back for a Sept. 3 multiplex debut. Meanwhile, on Sept. 4, Mulan became available exclusively to Disney+ subscribers willing to pay $29.99 for streaming access.

The two blockbusters are going head-to-head this weekend, but they're playing different games, in different arenas, for different viewers, and with entirely different scoreboards. 

A film slate and popcorn bucket that is spilling over.

Image source: Getty Images.

Screen test 

AT&T's move with Tenet seems pretty smart in retrospect. AMC began opening its stateside theaters two weekends ago, and it will have projectors running at 70% of its U.S. locations by this weekend. Social distancing will limit the number of patrons at each screening, but absent any real competition, multiplexes are dedicating most of their screens to playing Tenet. It will stay that way through next month at least. 

Mulan's move is more intriguing. Disney+ has exploded in popularity. The media giant has now topped more than 60 million Disney+ subscribers -- a jaw-dropping haul for a streaming service that wasn't even around 10 months ago. Charging nearly $30 for a stream might seem like highway robbery, but they're reaching an audience of diehard fans and desperate parents. Folks will pay, and it's not as if Disney would've sold three times as many streams at $10 a pop. Mulan won't make back its $200 million production budget with this stunt, but it will definitely eat into the red ink.

Disney still made two moves that could be considered questionable here. The first iffy move was not offering Mulan at theaters, especially with so many screens hungry for a quality draw outside of Tenet. Why didn't it offer the live-action reboot of the animated classic at theaters and at home, like Bill & Ted Face the Music did last weekend?

The other surprising strategic twist is that Disney has now revealed that Mulan will be available to all Disney+ subscribers at no additional cost in early December. It was easy to assume that it would make its way onto the streaming service without a premium charge eventually, but setting the window at just three months -- and making that clear days before the digital release -- could eat into potential sales this weekend. 

Since Tenet and Mulan are rolling out in different formats, it may be hard to tap a winner. We'll get Tenet's box office returns for the holiday weekend by Monday. Disney may or may not put out a press release on how Mulan fares over the weekend.

There doesn't have to be a winner or a loser. They could both win. Disney and AT&T shareholders wouldn't mind if that's how this weekend plays out.

Rick Munarriz owns shares of AT&T and Walt Disney. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.

Stocks Mentioned

AT&T Stock Quote
$19.19 (-0.47%) $0.09
Walt Disney Stock Quote
Walt Disney
$98.59 (0.74%) $0.72
AMC Entertainment Holdings Stock Quote
AMC Entertainment Holdings
$8.17 (13.00%) $0.94

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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