MCN Commentary & Analysis

Movie Content Scoreboard: Episode 2 – Tenet & Mulan

I have avoided writing constantly about the immediate prospects of exhibition and studios because we didn’t get to the next significant event between the last Movie Content Scoreboard in July and the Tenet/Mulan experiments of the last couple weeks.

I will deliver “Episode III – After The Fall” soon. But I wanted to keep the focus on the two recent major experiments. I keep reading emotional postures on the future of exhibition and VOD. But the studios have real financial skin in the game, while those writing about it have none… just a desire for what they would like to be entertained by, as soon as possible, in a way that makes them comfortable

The easier analysis of the two major movie releases is Mulan. It’s been two weekends+ and we haven’t heard a word about how much business was done in the Disney+ SuperPremium VOD window. We know that the film hasn’t done much business in any international markets where it landed in theatrical. And Disney knows that even if they add, say 50%, onto the Trolls World Tour number, this experiment is a streaming failure.

Unless there is a great surprise coming, Disney will lose no less than $50 million on this Mulan experiment. There is no conservative estimate of what Mulan would hav done in normal windows that would have ended up in a loss. The hope for this experiment is that it would at least break even, if not make some fraction of what normal windows would offer.

If it were not for the public embarrassment, Disney would likely be well-served, financially, to refund half the Mulan SPVOD fee that anyone has paid and push the film out on normal PVOD at $15 a pop. This would make the market much wider instantly, and most likely return a higher net. But that is not going to happen because… again… the public embarrassment at this point. Disney has much bigger issues.

Tenet is more complex, in every way. $30 million domestic. $180 international, almost a third of which is China, which usually costs an extra 20% of gross against rentals. But with premium deals for theatrical done by WB, that is probably a 40% bigger hit than any other country.

A generous estimate of Tenet rentals coming back to WB worldwide after three weekends is $130 million.

Do I believe that there is a second wind for Tenet? Absolutely. But if the film’s PVOD brings in 50% more than the world record for VOD, the generous estimate on gross returns to WB for Tenet is about $150 million.

So we made it to $280 million. Now add another generous $80m in post-theatrical/VOD. Hell, let’s go $150 million gross with a massively successful theatrical rerelease returning $75 million. $435 million. WB doesn’t lose money on Tenet in this most generous of scenarios.

What would Tenet have looked like in the normal series of windows?

Conservative worldwide gross of $650 million, returning $400 million to the studio. (Remember the pumped-up split. And this estimates $150 million of the gross from China, at a reduced split.)

VOD and physical media sales net a conservative $200 million.

Premium Cable/Satellite window, conservatively $30 million.

Streaming second window, say $20 million in the first two years.

$650 million, conservatively, with another $50 million in potential incidental revenues from areas like Merchandising, International Post-Theatrical, etc. AND don’t forget that the marketing budget is made smaller by over $100 million in cross-promotional ad-committed marketing deals that aren’t happening under the current situation.

Add an extra $100 million in marketing costs, if you will, for a “regular” release. Take every financial advantage you can in adding it all up. Pump up the current release all you like and tighten the margins on a traditional windowed non-COVID release… and you are still leaving at least $100 million on the table in the current scenario. On a $200 million investment in production.

There are at least 16 completed movies in a similar boat as Mulan and Tenet. So aside from “I want to see it on my TV right NOW!” what argument can anyone make to cause studios to see any advantage in moving forward right now?

That discussion in Episode 3…

9 Responses to “Movie Content Scoreboard: Episode 2 – Tenet & Mulan”

  1. Dr Wally Rises says:

    Thank you Dave. Two small rejoinders : Mulan has been out for 12 days, not three weeks.. And there is a growing belief and momentum now that Soul will now inevitably be going the same Disney+ route come November.. Which can at least be taken as circumstantial evidence that Mulan has done well enough to proceed with repeating the experiment?

  2. Stella's Boy says:

    The CDC saying normal is possible by late 2021 with a vaccine would seem to be bad news for studios and movie theaters.

  3. David Poland says:

    I will adjust the Mulan timing.

    Whose growing belief and momentum, Dr Wally? Someone floated it and now it’s a full on rumor that Disney has denied.

  4. Stella's Boy says:

    I’d say Tenet proves that most people don’t feel safe going to a movie theater right now and have little desire to. That seems like a message studios and movie theaters need to pay close attention to: “A recent Morning Consult report from says only 18% of consumers feel comfortable returning to cinemas.”

  5. AkiraKaneda says:

    A key difference might be whether or not a “quarantine movie” could have movie theater legs post-quarantine.

    For example, Mulan is DOA, with most reviews appreciating the scenery but complaining about the lack of heart and a superhero heroine rather than the brave girl portrayed in the animated film. You put Mulan in theaters in a year and very few will go.

    Tenet, on the other hand, is from one of the best directors working today with a sizable following who will not only see his films several times to dissect them, but will also chase a 70MM screening if they can make it happen. (That’s my oldest son and I for Dunkirk.) You give me a safe screening of Tenet in six months to a year, I’ll be there with my family.

    I could be very wrong — I have been in the past! — but for truly good event pictures, I think audiences will head to the theater if the experience is worth it. (I’ve seen every Bond movie in the theater since A View To A Kill — and I’;; see it six months after VOD in a theater if I can.)

  6. David Poland says:

    They are. Clearly.

  7. David Poland says:

    There is little upside to releasing it and then re-releasing it. There are certainly films that can shake money from the tree when theaters are fully open. But that is not a model that the studios will be aiming for.

  8. Dr Wally Rises says:

    ‘Whose growing belief and momentum, Dr Wally? Someone floated it and now it’s a full on rumor that Disney has denied’.

    A fair point. At any rate, if Soul is on American movie screens in November I’d be frankly stunned.

  9. Serg says:

    Isn’t 400 net profit on 650 theatrical an unusually high margin?? Maybe in NA distribs can get 60 cents on the profit dollar, but this margin is certainly much lower international?

    As someone who has minimal experience with South American theatrical market, you’re typically only seeing 30-40 cents on the dollar IF you’re lucky.

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