The Walt Disney's annual report gives more information about how its direct-to-consumer streaming services make money. Disney has been experimenting with its premier access premium video on demand offering, which allows Disney+ subscribers to watch some films the same day Disney releases them in theaters.
Disney says subscribers paid $923 million for its on-demand releases last year. That's a 70% increase from the year before, but investors need more context to decide if they should be happy with that result.
The image is from Walt Disney.
How much is it brought in by Premier Access?
Disney's reported revenue from those on-demand purchases was over a billion dollars last year. Disney released four films via premier access in fiscal 2021, Raya and the Last Dragon, Black Widow, and Jungle Cruise. In 2020, it released one film, Mulan, which didn't get a theatrical release in the United States. Disney says it had 13 UFC events in 2021.
A lot of money may be coming from UFC pay-per-view buys. UFC 246, featuring Donald Cerrone and Conor Mcgregor, was the top UFC pay per view in 2020. That generated $65 million in revenue. UFC 249 generated over 45 million dollars. There were nine other events that year.
Disney raised the price of UFC pay per view events by $5 in 2021, and sold two extra events to make up for the one it missed in 2020. The fight that generated the most revenue was the one that topped 1.2 million buys. If the other 12 events averaged just 250,000 buys, the UFC would have made $300 million in revenue for Disney.
The four films that will be released in the next year may have only generated an average of $150 million in additional revenue for Disney. Mulan may have generated more, but demand was skewed because more consumers were stuck at home during the Pandemic and theaters weren't showing the film.
Is that enough to keep up releases?
Disney gets to keep 100% of the revenue generated from on-demand sales, which is a good thing. It gets around 40% of international ticket sales when it releases a film in theaters.
The four films performed in theaters.
Title.
Domestic gross in millions.
International gross in millions.
The take is estimated.
The Last Dragon and Raya.
$50.
$75.6
$65.
The woman is called Cruella.
$86.1
$138.6
$110.5
The Black Widow is a woman.
$178.6
$196
$188.6
Jungle Cruise.
$117
$102.
$111.2
Box Office Mojo is a data source.
Disney used to make billion-dollar box office hits, but they are not as big as they used to be. The four films had box office sales that were less than Disney's net revenue from Premier Access.
The question is whether the demand is low because of Premier Access. Black Widow, the Legend of the Ten Rings, and Eternals are some of the best examples of its releases. In September and November, there were theater-only releases.
Black Widow had a better opening weekend in the U.S. Black Widow did not do as well in theaters as Shang-Chi did, but it still sells a few million dollars' worth of tickets every weekend. Four weeks after its release, Eternals is on track to surpass Black Widow ticket sales.
Black Widow's additional revenue from Premier Access is likely to have a bigger impact on Disney's net revenue than either of the other movies. Disney likely still saw a net benefit from the release strategy, even though demand at the box office may have been slightly down. Die-hard fans still showed up in the theaters for the opening weekend of the film.
It requires a Disney+ subscription to be eligible for the wild card. It is a net benefit for the media company if it drives new subscribers to sign up.
During the company's fourth-quarter earnings call, CEO Bob Chapek said he plans to remain flexible with Disney's film release strategy. Bigger action films that play well on the big screen, like the Marvel series, are more likely to go exclusively to theaters, while family films may perform better with the hybrid release. "We're going to do what's best for our shareholders," he said. He and his team have the best insights into the performance of each film release. It looks like Premier Access can still provide value in the future.
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Adam Levy has shares of Walt Disney. Walt Disney is recommended by The Motley Fool. The Fool has something.
Adam Levy is a shareholder in Walt Disney. Walt Disney is recommended by The Motley Fool. There is a disclosure policy for The Motley Fool.
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