Trades and Analysts Have Been Proclaiming How Mulan‘s Success Rides on Its Performance at the China Box-Office, While Overlooking the Key Factor in How Much Disney Will Actually Take From the Ticket Receipts and How it will Effect the Overall Bottom Line.
The Key to Mulan‘s Success in China Resides in How Much it Will Drive Traffic to Shanghai Disneyland, and Generate in Licensing and Merchandise Down the Road. Same as Star Wars in China.
This is Why Disney China Should Release Mulan Across All Major Streaming Platforms; Tencent Video, iQiyi, Youku, Bilibili, MangoTV, and even ByteDance’s Xigua Video and Douyin, as Streaming-on-Demand. Providing Its Box-Office Receipts to Aid Cinemas in a “Coronavirus Recovery Relief Fund”.
By Ryan Carroll, Managing Editor
March, 2019.
Opinion
From January 25th, the start of the Chinese New Year Spring Festival celebration, to the end of February the China Box-Office lost an estimated $2.5BnUSD in ticket sales alone.
This revenue loss for the cinema industry in China does not take into account; lost concessions (more on that later), merchandising (a growing segment in China), online ticketing app fees (over 90% of all movie ticket are bought via mobile apps), and other related movie-going expensive. And, even non-movie-going expenses like eating out, taking the metro, or taxi / ride-sharing service, are unknown.
To have a little understanding that the shutdown of the COVID-19 coronavirus had on China, a little economic comparison that most people can relate to is in order:
The China Box-Office in the 20 days from the beginning of the Chinese New Year Spring Festival produced $3.9MM in revenue, compared to $1.52Bn over the same timeframe in 2019.
Spring Festival 2019 – $1,520,000,000
Spring Festival 2020 – $3,900,000
As I normally abbreviate my millions and billions of dollars, I wanted to write it out as the visualization of this number is staggeringly more obvious.
Cinemas Selling Concessions Online, Under Cutting China’s eCommerce & New Retail Prices
With absolutely no revenue coming in for over a month and no sign of when the Beijing government will allow not cinema chains to reopen anytime soon. They have issued guidelines to the movie theaters on seating arrangements, but it was later reported that these guidelines were just for future implementation.
That every other seat and every other row shall remain empty, patrons will be required to keep their face masks on for the duration of the movie, and after every screening the entire screening room will be disinfected.
Future guideline for movie theater safety as COVID-19 restriction begin to be lifted.
With revenue not in sight and overstocked concession inventory, movie theater chains from the smallest to the biggest in the country, Wanda Cinema. Are selling snacks and bottles of water online at discounted prices.
Selling inventory with free delivery at competitive or better prices than Alibaba’s popular New Retail store HEMA. With one cinema was selling Evian that is even beating out the retail price.
But, with concession sales like this, at discount prices and free delivery, every cinema chain is still going to be ‘in the red’ for Q1 of 2020. With some smaller cinemas, and even smaller cinema chains potentially going out of business if they are not bailed out by the government and film bureau.
Mulan is a “Huge Risk” for Disney
Disney’s live-action remake of Mulan is just the next-in-line of Disney animated films being adapted into live-action features, but from every trade and outlet out there one would think that adapting Mulan poses such a financial risk to the House of the Mouse. That it does not fit into an established business trend that Disney has been following, and establishing for nearly a decade. Without a single miss.
A risk that only being major success at the China Box-Office could mitigate, due to the; extraordinary budget ($200MMUSD), on an all-Asian cast, and its adaptation from a Chinese ballad and a “risky” Disney 90s classic.
Which just happened to feature Eddie Murphy as a beloved talking Dragon sidekick. NOTE. Mulan (1998) grossed $304.3MM and was nominated for the Academy Award and Emmy for Best Animated Feature.
So far, none of Disney’s live-action remakes have faltered at the box-office, Cinderella, Maleficent, Aladdin, nor The Lion King which is why they had moved on to make Mulan. It is a successful trend with a built in audience, but not one of these films have broken out at the China Box-Office, such as the Marvel Cinematic Universe has.
But, it is Disney’s $200MM “Bold Gamble” with an All-Asian Cast that everyone (not just The Hollywood Reporter that I have hyperlinked) is talking about. Proclaiming that without a potential China Box-Office release, due to it being pulled “delayed” because of the coronavirus, that it may falter or bomb at the worldwide box-office and be a miss for Disney.
First of all, the reliance of Hollywood’s take at the China Box-Office is highly over-stated, as I have pointed out many times (most recently in my 2019 China Box-Office Overview), but let’s look at the trend of Disney live-action remakes of classic animated movies. Along with their China Box-Office takes, to get a better example of where Mulan truly stands.
- Maleficent (2014) budget: $180-$263MM, Box-Office: $758.5MM, China Box-Office: $47.7MM (studio take 25% = $11.92MM)
- Cinderella (2015) budget: $95-$100MM, Box-Office: $542.4MM, China Box-Office $71.1MM (studio take 25% = $17.77MM)
- The Jungle Book (2016) budget: $177, Box-Office: $996.6MM, China Box-Office: $150.1MM (studio take 25% = $37.5MM)
- Beauty and the Beast (2017) budget: $160-$255MM, Box-Office: $1.26BnUSD, China Box-Office: $85.8MM (studio take 25% = $21.4MM)
- Dumbo (2019) budget: $170MM, Box-Office $353.5, China Box-Office: $21.9MM (studio take 25% = $5.4MM)
- Aladdin (2019) budget: $183MM, Box-Office: $1.05Bn, China Box-Office: $53.5MM (studio take 25% = $13.3MM)
- The Lion King (2019) budget: $250-$260M, Box-Office: $1.657Bn, China Box-Office: $120.4MM (studio take 25% = $30.1MM)
Average = $78.6MM (studio take average 25% = $19.6MM)
Mulan was expected to play better than the previous Disney live-action remakes, but the notion that the China Box-Office is a “Obi-Won, Only Hope” for this average budgeted Disney live-action remake is blatantly false.
Most likely Mulan would have made $150MM so Disney would have taken home $37.5MM, if Mulan was a true breakout movie and made $250MM then Disney would have been looking at $62.5MM. A number that would have obviously contributed to Disney’s bottom line.
Tax Right Off For Disney
With the worldwide release of Mulan fast approaching, March 27th, Disney has a choice to make. As it is clear that even if movie theaters in China are open they will be at such a limited capacity it would not be in Disney’s favor to open the film. While it is also reasonable to suspect that the China Film Bureau will impose a “blackout period” for some timeframe after cinemas resume to normal, so that the local film market may find some form of recovery.
This is why it may be in Disney and Disney Shanghai’s interest to begin negotiating with the China Film Bureau about releasing Mulan, day-and-date, across every major streaming platform; Tencent Video, iQiyi, Youku, Bilibili, MangoTV, and even Xigua Video / Douyin (TikTok). For a set period of time, as a Streaming-on-Demand (Video-on-Demand), at a theatrical movie ticket price. With revenues split between the streaming platforms and the cinemas across the country, as a form of “coronavirus relief” fund.
Disney would also forfeit their 25% box-office ticket receipt and contribute it towards the cinemas’ “coronavirus relief” fund. How the revenue share will be split will be determined by the China Film Bureau, and distributed by them.
Cinemas could also sell concessions with at home delivery, as mentioned earlier in the article, which they are already doing.
Mobile ticketing apps such as Maoyan and Tiao Piaopiao could be involved via marketing the release of Mulan on streaming platforms with proceeds going towards the cinemas “coronavirus relief” fund. Which is part of their business model to begin with, along with purchasing tickets.
For Disney this would be a loss, but only in the short-term. As we see the average animated live-action remake is $78.6MM, but Mulan would probably be in the range of the two highest grossing films $120-$150MM. Disney would potentially be able to write-off a loss of $100-$150MM on Mulan for 2020, with this strategy.
But, the write-off is nothing compared to what is really at stake for what Mulan means to Disney Shanghai’s bottom line, and it has nothing to do with the China Box-Office.
Bob Chapek’s First Step in Taking His Own Ride of a Lifetime
In a somewhat surprise move Bob Iger stepped down early as CEO, to remain on as just Executive Chairman for the remainder of his tenure at Disney, and he promoted Bob Chapek who oversaw the Parks, Experiences and Products, as CEO.
After taking over as CEO one of Bob Iger’s first steps, was buying Pixar, and beginning the long process to building Shanghai Disneyland. A theme park achievement that is up there with Iger’s other achievements as Disney CEO such as purchasing Marvel and Star War (Lucasfilm).
A theme park which is going to take a revenue loss of $175MMUSD as it may remain closed for two months because of the COVID-19 coronavirus, along with a $40MM hit from Hong Kong Disneyland.
Other than the Marvel Cinematic Universe, which has made $2.6BnUSD to-date at the China Box-Office, the goal of Disney movies and Star Wars movies is to drive Chinese audiences to Disney Shanghai and towards merchandise and licensed products.
As we recently saw with Rian Johnson’s Knives Out made more money than Star Wars Episode IX: Rise of Skywalker at the China Box-Office, but Rise of Skywalker licensed products and merchandising went gangbusters in China.
Which has been Disney Shanghai and Bob Iger’s long-term strategy for Star Wars in China since the beginning.
The same can be said for Mulan and just as Bob Iger begins his prologue in A Ride of a Lifetime about the opening ceremony for Disney Shanghai, and the tragic event of a boy being killed by a crocodile at the Disney Resort in Orlando. This is a moment where Bob Chapek as the new CEO of Disney, can utilize its massive resources to not only do something that is good for the situation of cinemas who are hurting in China; but for the better of Disney Shanghai as a whole.
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All things are part of one single system, which is called Nature; the individual life is good when it is in harmony with nature.
Zeno of Citium
Sympatheia: n. The belief in mutual interdependence among everything in the universe….that we are all one.
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About the Author
Born and raised in the Missouri-Ozarks Ryan studied Film Production, and East Asian Culture, at the University of Kansas where he was a UGRA recipient that led him on a seven-year long, Journey From the West, to China. Where he worked with Warner Brothers, the China Film Group Corp. and the National Bureau of Statistics of China. Before returning to the States, where he specializes in Chinese Anime & Comics, China’s Box-Office, and Chinese entertainment-tech industries. He has a dog in China, Abigail, and a dog in the Arkansas-Ozarks, King Blue, who help ease his anxiety of suffering from the “Two-Dimensional Complex” that is trying to understand the Culture Industry landscapes of the Middle Kingdom.
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