Disney's (DIS 0.16%) decision to exclusively release to theaters its remaining 2021 movie slate wasn't just because cinema had sufficiently rebounded to support stand-alone feature films, but also because its Disney+ streaming service has become such a massive success it doesn't need to artificially prop it up any further.
Beginning with The Last Duel's release on Oct. 15, Disney will provide theaters with a 45-day window of exclusivity for a string of movies before they appear on the Disney+ service.
While it touted its summer lineup success that saw five of the top eight biggest domestic releases come out of its studio as the rationale behind the change, it's also clear Disney hitting the milestone of 116 million streaming subscribers means it is so successful it doesn't need to funnel films to the service to get people on board.
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Hitting the ground running
Disney far surpassed Wall Street's expectations, which had forecast the entertainment king would add just 9 million new subscribers during the quarter and come in at 112.4 million in total.
That would still be a significant number, but would be in line with the belief that Disney+ growth was slowing following its fiscal second-quarter report, when the service topped 103.6 million subscribers, but added just 8.7 million new viewers.
It followed the rapid expansion experienced at the beginning of the pandemic and that was when the need to add new content was born. With theaters first shut completely, then allowed to open with only limited capacity, the ability to generate the kinds of revenue needed to support big-budget films was not there.
It also allowed Disney to tout its streaming service as having blockbuster fare that couldn't be found anywhere else, although much of it was actually forgettable. It was Mulan, Soul, and the broadcast of the Broadway play Hamilton that helped attract millions of subscribers in 2020.
This year, it was the streaming debut of the Marvel film Black Widow that allowed Disney to boast the film generated $60 million for the service. Yet it also spawned a new controversy that threatened to overshadow and disrupt the streaming service.
Dissension in the ranks
While Black Widow eventually made $80 million in its theatrical opening, and some $377 million worldwide, actor Scarlett Johansson said she was cut out of the loop from money she would have earned had the film not been exclusive to Disney+.
Because most actors get a salary for performing, but then earn additional money from the box office receipts, Johansson sued Disney for breach of contract, alleging it improperly diminished the amount of money she would otherwise have gotten had the film gone to theaters first.
A light bulb seemed to go off for other actors as well, who began mulling whether they should also sue the studio. This announcement by Disney that its movie lineup will return to theaters gives it the chance to quell any further movie star uprising.
Certainly AMC Entertainment (AMC 8.22%) is happy with the move, as CEO Adam Aron cheered the decision and promised to "sell boatloads of tickets" for the studio.
Ready for the big screen
Certainly the new release calendar can reasonably be framed by Disney as forged from cinema's revival. Its latest film, Shang-Chi and the Legend of the Ten Rings, has earned $152 million in domestic receipts and $264 million worldwide, even without access to China. That speaks to a theater industry in recovery, even if not at pre-pandemic levels.
But it also indicates Disney doesn't have to worry about its streaming service, either. The strong subscriber growth Disney+ continues to enjoy means it can stand on its own without the crutch of exclusive movie debuts.
