You might have heard about Disney’s recent release of Mulan on its streaming platform Disney+. Read...

You might have heard about Disney’s recent release of Mulan on its streaming platform Disney+.

Read this article and make TWO POSTS before as follows:

https://www.forbes.com/sites/enriquedans/2020/09/01/disney-takes-a-gamble-on-price-elasticity-withmulan/#5ee5936823d9

Post 1. What are the justifications for Disney to set the price for streaming of the movie at $30 on top of the Disney+ subscription fee $7? Explain in 50-100 words. This post will be assessed as an original contribution. There is no need to finish this post with a question.

Post 2. Do you think the price elasticity of demand for Mulan is elastic or inelastic? Discuss it in 100-150 words.

Expert Solution

1)

Due to the Covid-19 pandemic, Disney recent film Mulan is going to be released on its Disney+ streaming platform worldwide, except China.
To promote social distancing, theatres are closed from the long period, because of which Disney as well as the other films industry are suffering a lot.
The company says that this decision is taken only for this film.
This movie's cost was around $200 million and the company cannot wait for the theatres to get open, therefore they planned to stream it on Disney+ platform.
This film will be available on Disney+ platform at a price of $30 in the United States and be only available for the people with a subscription which costs $7 a month.

Due to Coronavirus Pandemic, theatres are closed, in one or the other ways people are trying to find entertainment stuff across the Internet. As they cannot go out because of the pandemic, they are fully dependent on the internet for their entertainment.

In this case Disney is providing entertaining films to attract the minds of its viewers, the company is aware of the fact that everything is going online nowadays, so why not movies can also follow the same path. Not only this, with the subscription of $7 per month viewers can experience unlimited entertainment. The quality of the series and the films also make the budget friendly. People nowadays only want entertainment, then wheather it is in the form of movie or anything else. And according to the company, Disney has calculated average cost which the whole family will spend on watching the movie in a theatre which matches the cost of the film watching online.

So according to me it is justified for disney to set the price for streaming of the movie at $30 on top of the Disney+ subscription fee $7.

2) Price elasticity of demand

Customer's desire for any product or service changes because of its price. As if let's say that good (x) has any substitute (y) and the price of the good (y) is less than the good (x), then the customer's demand shifts and he will consume the good (y) because it will be a less expensive product.

This way demand shifts because of the price. Price elasticity of demand measures the degree to which the demand of a product changes due to its price.

The elasticity of Demand for the film Mulan according to me depends on some factors-

In this pandemic, The one andand only way of entertainment for the people is the Internet. If other films rather than Mulan are less expensive to watch, people can watch the other films. Here demand will be inelastic. Or,
If the person is a fan of Disney films or if he/she has interest theh he will be watching the Disney films irrespective of the cost of film, so he will only watch those films. In this case demand will be elastic.

Rahul Sunny answered 1 year ago

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