Disney Wants You to Pay $30 to Watch Mulan From Home. What Does This Mean for Other Upcoming Blockbusters?

Audiences are finally going to get to see the live-action Mulan remake. But it won’t exactly be cheap.

The film was originally scheduled to release in March but was repeatedly delayed as Disney hoped to wait out the worst of the COVID-19 crisis. Many prognosticators (including this one) assumed that Disney would never drop such a highly-anticipated, potentially lucrative release on its streaming service, Disney+. But we are living through desperate times, and it’s clear that theaters in major American markets will not be opening in any significant way in the coming months.

So now Disney has become the first studio to release a truly massive film originally set for theaters onto a streaming platform. Families will need to have a Disney+ subscription ($6.99 per month) and pay $29.99 on top of that to watch the movie when it drops on Sept. 4. The film will debut in theaters outside of the U.S. in countries where cinemas are open, including China.

In the past several months, some studios have abandoned plans for a theatrical rollout and put lower-budget films like King of Staten Island (which cost $20 million) and Trolls: World Tour (which cost a still significant $90 million) on streaming services for $20. For many, $30 sounds relatively steep in comparison. But Mulan cost $200 million to make and was likely to be one of the biggest grossers of 2020.

Disney CEO Bob Chapek said on an earnings call Tuesday that Disney is “looking at Mulan as a one-off,” not a new business model. But if the pandemic wears on and theaters remain closed, it’s hard to imagine studios holding onto films indefinitely. At some point, they will need an income stream, and Disney has now set the possible price for movies like No Time to Die and Wonder Woman 1984, should their studios decide on a streaming release. That’s bad news for movie theaters who are already in dire straits financially.

Here’s how to make sense of the Mulan news, and what it could mean for the future of movies.

$30 sounds outrageous. But the math makes sense

Doing some back-of-the-napkin math, that hefty price tag is actually pretty reasonable.

The average cost for a single movie ticket in America is $9.26—and that’s before parking and popcorn. Charging $30 for a family of four to watch a new big-budget film an unlimited number of times from the comfort of their own home is, relatively speaking, a deal.

And then there’s Disney’s own internal calculus. Mulan reportedly cost about $200 million to make. A recent not-very-scientific but still helpful Variety poll asked Twitter users how many people would actually pay $30 for the live-action Mulan movie on top of their Disney+ subscription. Only 14.7% answered yes.

That doesn’t sound like a lot of people. But let’s say that about 15% of Dinsey+’s 60 million subscribers pay $30 each to watch Mulan. Disney grosses about $270 million from those purchases alone. Add to that theater ticket sales in countries where movie theaters are actually open. That’s not exactly an Avengers: Endgame-level victory for Disney, but the studio will almost certainly recoup on its investment at a time when most studios are bleeding money.

Disney could really use that win right now. The announcement about Mulan’s Disney+ debut largely overshadowed the other bombshell piece of news from Disney’s investor call: The company’s lucrative parks division has taken a $3.5 billion hit since the pandemic began. Overall, revenue at Disney fell over 40% in the third quarter.

And the future does not look bright: Disney’s theme parks—their big moneymaker—are either closed or operating at an extremely limited capacity. It’s not clear when the parks can safely welcome massive crowds again. They need to find a shorter-term revenue stream somewhere.

This could be a test balloon for future blockbuster streaming releases

Studios like Disney depend heavily on the theatrical experience. Their franchise films, from Avengers to Star Wars, are expensive spectacles designed to be seen on the big screen opening weekend, lest you overhear a spoiler in the office Monday morning or run across one on social media. Offering their most expensive movies on streaming services would undercut the very nature of an event film.

Right now studios like Disney want to communicate to audiences that movies like Mulan have value—more value than a Netflix movie. It’s unclear whether consumers will buy that argument. It reportedly cost $200 million to produce Mulan. Michael Bay’s Six Underground reportedly cost $150 million, but the action movie was included with the price of a Netflix subscription. Netflix has announced even bigger-budget movies for the future, including an action flick starring Dwayne ‘The Rock’ Johnson and a James Bond-esque franchise starring Chris Evans and Ryan Gosling from the directors of Avengers: Endgame.

Disney would argue that it creates, on average, better products than streaming services like Netflix, regardless of budget. But is the quality of Mulan so much better than the quality of Six Underground that it’s worth paying significantly more to see it? Consumers will have to take a chance to find out.

It’s unlikely that Disney built the module that would allow users to pay for a movie within the Disney+ app for Mulan alone. It’s possible that films like Black Widow and Soul, which were supposed to debut in theaters this year, could see a similar rollout on the streaming platform.

Other studios may follow Disney’s lead. At the beginning of the pandemic, it seemed ludicrous that movies like Wonder Woman 1984, No Time to Die or Dune might go straight to a streamer or VOD. But there’s also no obvious end-date to theater closures in the United States. Tenet, which Hollywood had pinned its hopes on being the first movie to reopen American theaters, will now release overseas in September and arrive in a limited capacity in the U.S. at the relatively small number of drive-in theaters that are currently serving small audiences. That doesn’t exactly paint a bright picture for the near-term future of the American theatergoing experience. We may end up watching some of these movies from our couches, and the cost will likely be determined by Mulan’s success.

It’s bad news for movie theaters

Disney’s decision to release Mulan on VOD at all is a major blow to movie theaters who were looking forward to selling tickets to that film in order to stay afloat, whether that meant selling relatively few seats in 2020 or a massive hit in 2021. “Every exhibitor I have contact with feels like this is a sucker punch to the gut,” Doug Stone, president of Box Office Analyst, told CNBC.

The Mulan news comes on the heels of the announcement that Universal and AMC came to a deal last week that will allow Universal to move their movies to VOD 17 days after they premiere in theaters, a much shorter timespan than the previously agreed-upon 75 to 90 days. The sooner movies end up on streamers, the less incentive there will be for audiences to leave their houses, even once the pandemic ends. Movie theaters have been losing major ground during the pandemic—and they just lost even more.

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Write to Eliana Dockterman at eliana.dockterman@time.com.