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Adam Patel: Adventure Capitalist

Only a week or two ago, I voiced my concerns that most of the tent pole movies that pull big audiences into cinemas are produced by Disney who now, via Disney+, their streaming platform, have a means of cutting cinemas out of the supply chain completely - a huge market shift that could ultimately spell the end of cinemas and complete disruption of what has for decades been the standard release model for movies.

Today, Disney announced that their new live-action Mulan will indeed go directly to Disney+.

This, of course, does not surprise me. It was the obvious next move. Why settle for margins when for basically no cost at all, you can bank the entire distribution pie?

Netflix has already shown that cinema exhibition is not necessary to have a movie be a commercial success - heck, it's not even necessary to bag big award nominations and wins. So what is there to hold the traditional distribution model in place?

In all honesty, it's been struggling for years.

Around a decade ago, cinema bosses began a campaign to try and make cinemas, well... matter. Already, you no longer needed to go to your local multiplex to see a movie first. And due to LCD TVs, the screen size wasn't a huge trade off either.

Gimmicks such as 3D were introduced (and not for the first time) to try and pull people out of their living rooms and back into cinemas. It didn't work for long.

Many cinemas then attempted a new look: refurbishment, luxury reclining chairs, a wider upmarket range of snacks and refreshments.

These were all just attempts to try and entice movie lovers to choose their cinema over their living room. But now that isn't even the choice anymore. If Disney stop supplying movies to cinema chains, cinemas essentially become retailers with dramatically less product. And if that becomes the case, it literally will be a wrap for cinemas.

Why Disney May Well Make It A Wrap For Cinemas

Posted on Saturday, August 8th, 2020

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Only a week or two ago, I voiced my concerns that most of the tent pole movies that pull big audiences into cinemas are produced by Disney who now, via Disney+, their streaming platform, have a means of cutting cinemas out of the supply chain completely – a huge market shift that could ultimately spell the end of cinemas and complete disruption of what has for decades been the standard release model for movies.

Today, Disney announced that their new live-action Mulan will indeed go directly to Disney+.

This, of course, does not surprise me. It was the obvious next move. Why settle for margins when for basically no cost at all, you can bank the entire distribution pie?

Netflix has already shown that cinema exhibition is not necessary to have a movie be a commercial success – heck, it’s not even necessary to bag big award nominations and wins. So what is there to hold the traditional distribution model in place?

In all honesty, it’s been struggling for years.

Around a decade ago, cinema bosses began a campaign to try and make cinemas, well… matter. Already, you no longer needed to go to your local multiplex to see a movie first. And due to LCD TVs, the screen size wasn’t a huge trade off either.

Gimmicks such as 3D were introduced (and not for the first time) to try and pull people out of their living rooms and back into cinemas. It didn’t work for long.

Many cinemas then attempted a new look: refurbishment, luxury reclining chairs, a wider upmarket range of snacks and refreshments.

These were all just attempts to try and entice movie lovers to choose their cinema over their living room. But now that isn’t even the choice anymore. If Disney stop supplying movies to cinema chains, cinemas essentially become retailers with dramatically less product. And if that becomes the case, it literally will be a wrap for cinemas.

About Adam

I am not a day trader. I generally hold positions for between a few weeks and several years and any opinions I share have this sort of time scale in mind.

Nothing on this blog should be considered to be anything more than entertainment. It is certainly not to be considered to be financial advice.