Entrepreneurs

Disney Just Tried a Huge Experiment. Why It’s Actually a Brilliant Strategy


Disney has generated a lot of attention with the launch of Mulan, its $200 million franchise film that was expected to be a major summer blockbuster. Obviously, right now, summer blockbusters aren’t a thing, which puts Disney in a difficult position, so the company is trying an experiment. While Mulan will eventually be available to everyone that  subscribes to Disney+ (in December), you can pay $30 for what the company calls “Premier Access,” and watch it now. 

That $30 doesn’t actually buy you a copy of the film, like it would if you picked up a DVD or even bought it from the iTunes Store, for example. Instead, it’s paying for early access to stream the film on Disney+. You still have to keep your subscription to that service active, or you’ll lose access to Mulan as well. 

It’s fair to ask whether that’s even a good deal–meaning, whether the film is actually worth it–but I’m more interested in whether it’s a good strategy. Judging by the numbers, it appears that it is. 

According to data from Reelgood, Mulan accounted for almost 15 percent of all streams this past weekend–more than any other film. That’s saying quite a bit considering there is no shortage of streaming content available that doesn’t cost an additional $30 to watch. In addition, Bloomberg is reporting that downloads of Disney+ were up over 68 percent

That fact that people are willing to part with their cash to watch a film now that they could see later for free isn’t new in the age of streaming video. That’s the entire premise behind releasing films first in movie theaters, and withholding them from, say, Netflix, for a period of time. That release window is usually dictated by theater chains in order to protect their ability to sell tickets and overpriced popcorn. 

What’s different here is Disney decided to create its own arbitrary window, and offer people the opportunity to give them money for the experience of watching the film before it’s available to anyone paying $7 per month for Disney+. Disney is counting on the power of its brand, and a loyal audience to make up the financial hit that comes from releasing a $200 million film in the middle of a pandemic. 

And, according to the data from Reelgood, it appears that there is a willingness among consumers to pay for premium content as many people continue to social distance and avoid spending long periods of time inside, like at a movie theater. That is if they even can find one open. The ones that are, are doing so at a fraction of their usual pre-pandemic capacity. 

But the more important reason I think this is such a great strategy is this: Disney is creating value for Mulan by charging a premium price to watch it now. In doing so, it’s creating an experience, and people crave experiences. 

Which is actually a powerful lesson. First, $30 is a lot less than our family of six would spend if we had gone to see Mulan in the theater. Sure, it’s more than it would cost if we wait until December, but considering there aren’t a lot of social distance-friendly things to do over Labor Day weekend, a movie night seems like a pretty great idea. 

It’s true that when something is free, you perceive its value accordingly. When you pay for something, you experience it differently, as long as the cost.  An expensive steak often tastes better. Sure it might be a better cut of beef, and it may have been prepared by a chef with a few Michelin stars, but there’s also the fact that you convince yourself it’s better because you paid more for it. As a result, it tastes better. 

There’s obviously a balance because your customers have to believe that the value is supported by your brand. They have to believe that the thing they are paying for–the experience–is worth it. That comes from carefully cultivating your brand over time–something Disney has mastered. The good news is, so can you.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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