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Why Disney's Move to Streaming Only is a BAD Idea

Earlier this week, Disney made a restructuring decision that appears to change direction of its studios away from theatrical releases towards its streaming services (Hulu, Disney+, and Star).

This is a BAD idea!

Moving from theatrical releases to a streaming service focus will not only force theaters out of business (see Cineworld, that backed out of a deal to purchase the Cineplex Odeon chain of theaters in Canada and closed its doors as well as AMC which has very low cash reserves and may be out of business in the next few months), there is no guarantee of profits from the streaming services it operates in the foreseeable future.

Nobody could have expected a pandemic when some of the movies slated for theatrical release in 2020, and the shift of titles such as Artemis Foul, Onward, and Soul (December 25th) straight to Disney+, as well as the failed attempt at a premium access offer of the Mulan live action film. It's also safe to say that these movies have not performed financially as they were expected to at the start of 2020. That said, for a streaming service that has not reached profitability (and likely won't for the short-term), depending on it to generate the revenues the Walt Disney Company is down with lower park attendance and theatrical releases is not prudent to say the least.

With Disney+ and Star being fledgling operations and not expected to be profitable in the foreseeable future, investments were being made in high-production value projects such as the Mandalorian and WandaVision, and lower-cost reality shows such as the Magic of Animal Kingdom and The Imagineering Story were wise (and continue to be good investments). That said focusing on streaming service productions away from the more profitable theatrical releases will mean that other projects will no longer make sense (such as more big budget Avatar, Marvel, or Star Wars movies) since they'll never provide a reasonable return on investment.

If we take the $275 million Rise of Skywalker film as examples, there is likely no way of releasing these big budget films that the company would see a $1 billion return from streaming services. So that essentially means more low-budget offerings. Also worth noting, the $89.99 a year I pay is basically was not influenced by Onward, Artemis Fowl, Mulan, or Soul. They already had my money. I'm not sure how many people are going to sign-up for a streaming service simply because a new film is being released, and the $34.99 CAD cost of Mulan doesn't seem like something many Disney+ subscribers are willing to pay for a movie three months before it becomes widely released for free on the service.

The pandemic will be over at some point. We don't know when, let alone a clear timeline. However, all of us have to recognize that this short-term situation will disrupt some industries for sure, but likely won't impact the desire of die-hard movie-goers to see the newest films in theaters (if they make through to the other side). All studios (Disney and others) need to re-think this short-sighted focus on forcing theaters to shut their doors in favour of their direct-to-consumer streaming services. It's going to cost them a lot of money in the long-run and kill some movie franchises in its aftermath.

Don't be surprised if this path leads to increased regulatory scrutiny (under such things as the Canadian Competition Act) for anti-competitive practices and the emergence of real competition from smaller production companies that fill the void and offer new releases to struggling theaters.

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