'Encanto' became a word-of-mouth hit on Disney+ after playing in theaters, and it shows animated movies are essential to the company's streaming goals

• Engagement and viewership data shows "Encanto" has been a word-of-mouth hit on Disney+.
• Animated movies have played an important role on Disney+ during the pandemic, and they will beyond.

During Disney's Q4 earnings call in November, CEO Bob Chapek said that the company was "very carefully" watching family films and which demographics were returning to theaters.

The animated film "Encanto" was set for an exclusive theatrical release two weeks after the call.

The previous Disney animated movie to be released to theaters before that had been "Raya and the Last Dragon" in March 2021, which was simultaneously on Disney+ Premier Access for an additional $30 fee. (Pixar's "Luca" premiered last summer exclusively on Disney+.)

"Raya" earned just $130 million at the worldwide box office, $54 million of which was from the US. The disappointing box office for a Disney animated film suggested that families weren't ready to return in droves to cinemas amid the coronavirus pandemic.

Needless to say, Chapek's comments put a lot of pressure on "Encanto" at the box office, seeing as Disney and other studios have been happy to experiment with using animated films to boost their streaming services.

In the end, "Encanto" earned $228 million globally and $93 million in the US against a $50 million budget.

The film had a shortened 30-day theatrical window and then debuted on Disney+ on December 24. That's when it really became a breakout success, third-party data shows.

The data contextualizes how "Encanto" and other Disney animated releases have performed and how audiences have engaged with them. It suggests that streaming will be a major part of the future of Disney animated movies beyond the pandemic, but theaters can still play a role in driving buzz.

Streaming helped 'Encanto' expand its audience

Online engagement for "Encanto" when it first hit theaters was twice as high as when "Luca" and "Raya" first debuted, according to analytics firm Diesel Labs. The company measures audience engagement on social and video platforms like Instagram, Twitter, Facebook, and YouTube.

"Luca," "Raya," and "Encanto" all saw big drops in engagement quickly following their premieres. "Encanto" saw the biggest drop.

But it got a boost of engagement when it debuted on Disney+ a month later and has sustained that engagement in a way the other two movies didn't.

Viewership data supports that "Encanto" has been a word-of-mouth hit on streaming.

• "Encanto" was watched 407 million minutes in the US during its first weekend on Disney+, but in its first full week, from December 27, 2021 through January 2, 2022, the movie was viewed for 2.2 billion minutes.
• "Luca" was watched for 1.57 billion minutes in its first weekend exclusively on Disney+ in June, and 1.7 billion minutes in its first full week.
• "Raya and the Last Dragon" nabbed 1.08 billion minutes in its first weekend in March as a Premier Access title, in which Disney+ subscribers paid an additional $30 fee to watch the movie.

During its first full week on Disney+, "Encanto" also topped Nielsen's ranking of streaming movies, beating Netflix's "Don't Look Up, which was also in its first full week of release and was viewed for 2.02 billion minutes in the US.

To recap, engagement for "Encanto" when it premiered in theaters was roughly twice as high as when it debuted on Disney+ — and twice as high as the engagement for "Luca" and "Raya and the Last Dragon" when they debuted.

But engagement for all the movies dropped significantly after their initial premieres. Only, "Encanto" got a big boost after it became available on Disney+ after its theatrical run, and it's been able to sustain that engagement.

The data shows how animated movies play a vital role in driving engagement to Disney+, even when released first to theaters.

Still, it's safe to say that Disney will continue to evaluate the release strategies for animated movies on a case-by-case basis.

Pixar's next movie, "Turning Red," will be released in March as a Disney+ exclusive, the company recently announced. It had previously said it would debut in theaters.

The release plan suggests that Disney wasn't thrilled with "Encanto's" theatrical performance.

"Given the delayed box office recovery, particularly for family films, flexibility remains at the core of our distribution decisions," Kareem Daniel, the Disney media and entertainment distribution chairman, said in the announcement.

But another Pixar movie being released in June, the "Toy Story" spinoff "Lightyear," has potential to be a major hit in theaters, even as Disney prioritizes its streaming plans.

Both "Toy Story 3" and "Toy Story 4" grossed more than $1 billion at the box office. "Lightyear" could be a box-office hit with an exclusive theatrical run — if families are ready to return to theaters this summer.