I saw Encanto over the weekend. It isn’t quite Moana. There isn’t likely to be a hit single. But it’s a pretty damned good movie. Moreover, it is a movie very much in line with this moment in social history. It’s not what they are really selling, but the movie speaks, with magic and music, to the ideas of how we each see ourselves individually, but more importantly, how we assume others see themselves and how wrong we can be.
Here’s the problem…
Disney doesn’t seem to be putting the hard sell on this animated movie as they once would have. This is the 4th animated film released by Disney since Onward got caught up in the pandemic, opening March 2020. It is the 1st one since Onward to be released exclusively in theaters.
Did you see all the hype around the Encanto premiere last Tuesday night? Me neither.
So why is Disney getting out of the animation business? Well, they aren’t. But “they” seem to have lost their passion for it. Why? This is Bob Chapek’s Disney. And this is Kareem Daniel’s Disney. And between them, they decide how to prioritize content. And apparently, they looked at the numbers on The Good Dinosaur and Onward and determined that until an animated movie has a “2” or higher after its title, there is no point in spending a ton on marketing and trying their hardest to push it into orbit.
And what’s the problem with that?
Nobody knows which one might become the next Toy Story or Frozen or The Incredibles or Finding Nemo or Inside Out or even Coco, which grossed $800 million worldwide just 3 years after the (great!) Book of Life grossed just $100m worldwide.
Do you know what Coco is? The fifth highest grossing original in Disney animation history, behind Frozen, Finding Nemo, Inside Out, and The Lion King. No one I know of expected that.
So what of Encanto? The songs are not as memorable (by non-theater geeks) as the one hit in Coco or the remarkable songs from Frozen or the Lin-Manuel Miranda songs fest in Moana. But it has a remarkable story that, while centered on one character, really does reach out an include a wide array of personalities in a family… in every family. And because of that, I think this film could have a longer life than many of the other Disney animated releases.
Will Disney rev the engines the way that they did for the films that became surprise sensations before? It doesn’t feel that way.
The idea of a person or group in a major distributor deciding how to distribute each piece of content being created is interesting. In many ways, it makes a lot of sense to me. But if the last 2 years of managing the animation content at Disney was happening at any other studio, I would have to assume that they are getting out of that segment of the business. I don’t think Disney is looking to sell Pixar… but if anyone else had an asset like that and they were treating it this way… well, Amazon would surely buy Pixar for $10 billion and let you keep the rights to the last 25 years of Pixar films.
That brings us to Eternals. Opened to $70m domestic, in theaters only. That’s better than Ant-Man or the first Thor or Captain America MCU movies. Given the pandemic, it is clearly in range of Dr. Strange and Thor: The Dark World.
I think the movie it quite bad overall. Some seem to disagree. But the movie opened. A set of characters without a major following and it opened. Guardians of the Galaxy opened to $94 million in the summer with a marketing campaign that killed. This open for Eternals is no embarrassment.
Why?
Because there was no guessing. There was no hedging. There was no day-n-date or promised Disney+ release in a few weeks (though it will likely hit Premium VOD in early December and maybe D+ before the first of the new year).
The Marvel brand is not in play at Disney. It’s too big. Had they opened Eternals with a Disney+ Premium VOD option, it still would have likely opened to $60m domestic and maybe a million VOD units. But how would that affect 2nd weekend box office? Still mostly unknown, though it seems to be an area of legitimate concern. Eternals will still likely drop 60%-80% next weekend (because it’s not good).
The problem is… IP needs to be birthed. And if you are creating endless variations on how content is distributed, you will inevitably create stillborns that could have been healthy. And you will keep investing in stillborns that should just be buried.
The ego to believe that you or a couple of you know the result before you take the journey is where the trouble begins. No one has that skill to a certainty better than 70% or so… because it is not about any one vision.
And what we know, historically, is that when this mindset leads, the decision-makers invariably start protecting themselves with simpler narratives… clearer paths to success. Sequels, reboots, and IP, oh my.
In a world in which there are such varied delivery options and the ways of measuring success are also a blur, the act of creation of “the next thing,” becomes more and more evasive.
Let’s look to the hottest filmed entertainment title of the moment, Squid Game on Netflix.
Squid Game happened inside of the Netflix release model. It wasn’t released as a singularity because that is not how the company positioned it. They only do that for sequels/2nd seasons and their big “movies.” All the profile for Squid Game has come after it over-performed expectations. And it over-performed expectations by staying in the pocket of what Netflix does.
This is where my concern is mainly focused these days. The pocket of the theatrical business, to some degree, has been sewn shut.
Every pocket has its good sides and bad sides. The problem for others seeking to imitate the Netflix model is a lack of scale. But it is tantalizing. The hybrid release model has the problems of selling the audience that is willing to spend money on a title on 2 very different experiences at the same time. 32 flavors is great for Baskin-Robbins, bad for selling movies. And exclusive theatrical release comes with a big marketing price tag and very little control over the buying decisions of the audience unless you have pre-sold content.
Let’s flip the script. Netflix is a complete failure at theatrical, even though they have engaged as many as 750 domestic screens at times. Audiences aren’t paying the equivalent of a month of Netflix to see 1 show from Netflix on a bigger screen.
The hybrid release model expands the potential audience count, at least in theory, and gives those disinclined to go to a movie theater a way to see the movie in the first wave with the return on each purchase sending significantly more back to the distributor.
Theatrical offers the opportunity to build unexpected community and excitement that can lead to longer-than-expected holdovers, unexpected big hits, and a pile of actual cash and reputation that seems likely to increase the audience value of the content when it does land on streaming, even having been exploited theatrically for (hopefully) months before that can happen.
But whatever you are going to do with the individual piece of content, you have to care for the garden, pull every weed, manage the soil quality, keep pests away from the plants. You have to market and promote and use social media and engage with the audience in their journey. That is not extraordinary. That is basic. Foundational.
Think of it like gambling. The house makes its money, in most games, on the smallest of percentages. When you play blackjack, your edges on the house are hitting 21 and doubling down correctly. That is when you are (or have a chance to be) paid more than even money. If you play perfectly and aren’t hitting blackjacks, you will likely walk away no better than even and probably behind, because the house indulges itself in almost every other advantage.
If you win 5% at the gaming tables, you feel like you barely won… but at least you didn’t lose. If you lose 5%, you (and the 1000s like you) are keeping the casino open.
This is analogous to streaming. You get the fun of “gambling,” but the stakes are low and as long as you and a lot of others are playing, the house wins.
Theatrical followed by windows of other distribution is more like the high roller tables. The stakes are higher. There is a lot of money to be made. There is a lot of money to be lost. And there is a lot more than the game of cards in play.
The analogy starts to break down here a bit, as if you are a whale (in Vegas parlance for being a super-wealthy gambler), they are going to indulge you relentlessly no matter if you are winning or losing. They just want you to keep gambling. In Hollywood, you can get pampered for a while while losing… but lose enough and you are out of the casino.
Nonetheless, streaming is (broadly) a high volume, percentage play and theatrical is a play where you can actually incur losses (albeit losses softened by all the other revenue streams) and if you have a big hit, everyone gets to luxuriate in the cash waterfall. In the end, remembering the 5% margin for streaming-like mass gambling, the goal in the theatrical business has always been to have your small number of big wins pay for your losses and leave you 5% or 10% or 15% profit. (In the meanwhile, everyone gets their luxurious salaries as part of the machine.)
The most dangerous area, in my view, is when you can’t make up your mind what you really want to be, trying to have both models going at the same time. The greatest fantasy in the industry right now is that it can walk right down the middle, picking the best from both sides and never losing a step.
Hollywood has never been loaded with the ambidextrous.
And it is even more complicated at Disney, where they also have a LOT of revenue coming from broadcast and cable television right now. So they are juggling 3 balls… plus the parks… plus a top-of-class merchandising business. 5 balls.
I see Disney as the media content company with the greatest ambitions right now, with the potential to grow past Netflix. But I wonder, often, about their sense of themselves and whether they really understand what they are and how very different each of the balls they are juggling, trying to keep in the air, really are.
Until next time…
THB #24: Encanto, Eternals, and The Trouble With Disney