Disclaimer- I know nothing outside of what is being reported.
With the upcoming Little Mermaid Live Action version coming out this moth, Alan Menken drop a little update on the Hunchback Live Action version which can be read here; https://comicbook.com/movies/news/alan-menken-shares-update-live-action-hunchback-of-notre-dame-movie-hercules-broadway-exclusive-interview/
In a nutshell, the project is in limbo. Menken mentions the seriousness of the issues that Hunchback deals with and them brings up Hellfire. So it sounds like there COULD be a debate over this the version should be a musical as Menken say they can’t do the version without “Hellfire.”
Of course I could be completely wrong and the question of about it being a musical is not the reason but it does give credence to what Josh Gad said on instagram back in March “and hopefully the powers that be will see this love and let us make the live action adaptation the original animated film deserves.” (source)
Disney’s live action remakes do seems to flirt with making them musical or not. They are very half in half out. Mulan no but Beauty and the Beast yes. Cinderella has some diegetic singing but Little Mermaid will be a musical and then there is Lion King speaking “Be Prepare” but the studio wanted to cut it.
So the Hunchback is in limbo. Perhaps the studio feels like it could be taken more “seriously” without the songs and they can get their precious industry accolades if make it gritter and real which a musical would hindered. But the creatives want the music and the fans seem to want the songs.
Meanwhile Disney let a subsidiary (Searchlight) make a farce version that is Hunchback in name only so who knows what Disney is doing these days.
So TLDR – Hunchback version in Limbo