by Gabriel Valdez
Sony is playing hardball with Disney over the next “Spider-Man” movie. Will they still share production of the next movie and allow the character to remain in the Marvel Cinematic Universe? Or will the character revert to Sony and once again go solo in their own movie? The more important question might be why Sony is digging in its heels at this moment.
Chances are probably good that the two will figure out a deal. Yet the impasse reveals something more core about how studios need to begin interacting with Disney. Disney was already the most successful studio before its purchase of Fox. Now, it’s unquestionably the most dominant studio in the field.
Buena Vista is the releasing arm of Disney. According to Box Office Mojo, it’s controlled 36.5% of domestic studio market share thus far in 2019. That represents $2.79 billion.
The next closest studio is Universal at 13.9%. That represents $1.06 billion. And that’s before Disney really gets a chance to push any of their Fox properties onto the calendar.
Buena Vista has hovered around 20-26% market share for years, but the last time another studio came first was Universal in 2015.
This informs why Disney has been pushing so much material out. Good, bad, it doesn’t matter so long as they’re releasing an event film regularly.
A big part of what Disney’s doing is trying to choke out the calendar. Movies only tend to have extremely large openings during certain times of year – mainly the extended summer and holidays. The fewer dates available for other studios to get event films in, the worse a situation those other studios face and the more their properties are de-valued.
It doesn’t matter so much to Disney if a movie’s successful or not. They can weather a bad opening, such as the one for “Solo”. They’ll still be fine, and the franchise as a whole will still be fine. It matters that they can control the calendar and deny dates to other films. A major “Avengers” or “Star Wars” film can block other movies opening big for three weeks. Even a minor MCU film can scare off other studios for a two-week block.
The fewer good dates available for event movies, and the more other studios fail to launch their own franchises. Yet to do this, Disney needs franchises. They need new material constantly churning out of the MCU, “Star Wars”, and their live-action remakes of cartoon classics to be able to take up those dates. They often reserve them years ahead of time. This still isn’t enough to sustain Disney blocking all these dates out indefinitely. That’s a major reason it’s in other studios’ interests to play hardball with Disney about sharing or selling any properties.
Disney Needs Franchise Fuel
Disney still needs more fuel – more franchises. Sony and other studios are fully aware of this, and they own or have the rights to those franchises. The only way non-Disney studios can keep their ability to stake out dates in the calendar is to retain these franchises while denying them to Disney. The deal has to be much sweeter for a studio like Sony to essentially sabotage access to event dates in the future.
This approach by Disney is reminiscent of classic monopolistic behavior. Now, it’s important to point out that Disney is not a monopoly. It is striving to become one, or as close to one as it can get, and to do that requires monopolistic practices.
Monopolies don’t start exercising monopolistic strategies only after becoming monopolies. They use them in order to become monopolies in the first place. They often try to undercut a competitor in one area, and only once that competitor is driven out of that area, will they raise their prices.
This isn’t selling oil in 1890 Ohio, though. Movies are released nationally, and theater chains charge the same regardless of which studio releases a movie. How exactly is Disney able to make their approach most effective?
Disney has done this in an even more direct way. They’ve made theater chains sign ridiculous contracts – if they want to carry a large Disney movie like an “Avengers” or “Star Wars” release, they have to make agreements to show them on their largest screens for four weeks straight. In some cases, theaters have even been required to show more minor Disney films later in the year on a set number of screens for a set number of weeks. Both factors directly block the number and quality of screens available to other studios’ releases at key dates.
They’re also poisonous to smaller theaters that only have a few screens. It means that these theaters will often be blocked a month from showing any other movies if they want access to any Disney event films. Since another major release from another studio is likely within two-to-four weeks, it means that it’s going to be blocked from those small theaters entirely. Often, the only way for small theaters to change the films they’re showing is to carry whatever the next Disney event film is – with a similarly restrictive contract. This can create a cycle where smaller theaters are essentially locked into only showing Disney movies for months at a time.
This means that having more properties to fill those dates doesn’t just lock in more of the calendar for Disney. More to the point, it blocks those dates from other studios. More franchises means more large releases to force more imbalanced contracts with theater chains and to strong-arm smaller theaters. That means that Disney can deny screens to the releases of other studios. Even a flop can be contractually required to take up screens for four weeks.
Digging in Their Heels
This is what forms the context for Sony – and when their time comes, other studios – being very strict about negotiating favorable deals with Disney. The more franchises they allow Disney to have, the more event dates Disney controls. The more event dates Disney controls, the more screens they can force theaters to block from other studios’ releases – sometimes just for that event release, but sometimes by including even more minor films that take up screens on certain major release dates.
Sony is not just negotiating a favorable “Spider-Man” deal. They are also effectively negotiating the access their own films will have to the calendar in the future.
Of course it’s a goal for their films to make money. Of course it’s a goal for Disney to release on good dates. The best way to look at Disney right now, however, is to understand that their primary goal is to deny dates and screens to other studios’ films.
This is why they’re pushing so much material out the door. Regardless as to whether there’s a reason to make certain films, or even if some of them are record flops, each one can deny dates and screens to other studios for up to a month’s time. That’s good for Disney. It de-values the properties they’d seek to buy from other studios in order to further strong-arm theaters and further control and block the calendar.
What Can Be Done?
Neither Sony nor theater chains are heroes to Disney’s villain in this. They each have their own godawful business practices. Disney’s just the one that got there before the others, but it still makes sense for the others to dig their heels in before they can’t anymore.
It’s also difficult to figure out how to combat this. I’m going to be in theaters for “Black Panther 2” and “The Rise of Skywalker”. Disney’s making a decent amount of progressive event films and doing a better (though still far from perfect) job with women leads and actors and directors of color than many. I want to support those films, and at the same time not see Disney increasingly take over the industry.
The best answer I can give is that the key rests in greater regulation. Media and entertainment laws have become more and more de-regulated in the U.S. on endless fronts. In particular, the Paramount Consent Decrees need to be extended to Disney (and other players like Amazon). Aggressive enforcement of the decrees has all but evaporated. As in so many areas today, it needs to come back.