The Marvel Studio's release Black Widow just set a box office record for 2021, bringing in $80 million in domestic box office receipts in its opening weekend. That bests the previous record set by The Fast and the Furious sequel F9 last month.
Importantly, Disney (DIS -0.29%) also released the latest installment of the Marvel Cinematic Universe directly on Disney+ through its premium Premier Access service. The company shared that it generated $60 million in sales from the video-on-demand offer, validating the day-and-date release strategy. The question for Disney fans and investors alike is: What does it mean for the future?
The value of Premier Access to Disney
The $60 million in sales from Premier Access translates to about 2 million Disney+ subscribers paying $29.99 to add Black Widow to the service early. Of those purchases, Disney gets to keep between 70% and 85%, as video and app platforms take a commission on in-app purchases. So Disney collected between $42 million and $51 million in net revenue.
On top of that, the ability to watch the film from home without waiting may have attracted new Disney+ subscribers. The long-term value of new sign-ups for Disney+ and keeping existing subscribers engaged may be worth more than the Premier Access revenue.
Disney's box office economics aren't quite as good. Studios receive an average of 53% of domestic box office receipts and 41% of international receipts. That means Disney took about $74 million in net revenue from the $158 million in global box office sales over the weekend.
When you factor in the lifetime value of new Disney+ sign-ups from the Premier Access offer (maybe 10% of purchasers), the net revenue from each distribution channel is very similar. That said, the box office should continue to grow, while Premier Access is likely more heavily front-loaded.
Is Premier Access here to stay?
The success of Black Widow at the box office indicates Premier Access isn't having a significant negative impact on driving people to theaters. Some consumers will want to see the big blockbusters Disney makes in theaters and others will want the convenience of watching it at home.
In an interview with Bloomberg in March, CEO Bob Chapek said of Premier Access, "Whether or not this becomes a big part of our strategy going forward is really going to be up to consumers."
Based on Black Widow's opening weekend results, investors and Disney fans should expect more releases on Premier Access. The next release planned for the premium video-on-demand channel is Jungle Cruise on July 30. Other upcoming films in Disney's release schedule, Free Guy and Shang-Chi and the Legend of the Ten Rings, will debut exclusively in theaters on Aug. 13 and Sept. 3, respectively.
The ability for strong box office and strong video-on-demand results to coexist bodes well for Disney's distribution strategy. And Disney in particular may be able to benefit more from the dual release strategy than other media companies. Disney's films are much more rewatchable than most other studios' outputs, hence the popularity of Disney+ in the first place. But it wouldn't be a surprise if many consumers see a Disney film in theaters and then opt to pay for Premier Access to watch it again at home whenever they want instead of waiting three or four months.
While management has kept the details of Premier Access close to its vest, investors may get a more qualitative update on the service during Disney's third-quarter earnings call next month.