Why Disney Needs To Change Its Box Office Strategy
For the first time since 2014 (outside of the pandemic-stricken years of 2020 and 2021), it looks like Disney will not have a movie that reaches $1 billion at the box office.
For the past decade, Disney has been the undisputed king of the movie theater, with properties such as Marvel, Star Wars, and Pixar filling theaters and raking in money.
Image: Disney
This year, however, the studio has struggled to remain profitable at the theater, with four of its biggest films failing to make a splash.
A String of Under-performing Films
The usually reliable Marvel Studios had a rare misfire when Ant-Man and The Wasp: Quantumania struggled to excite fans. That film will be one of the rare Marvel movies to lose money at the theaters.
Photo: D23
Disney’s live-action remake of The Little Mermaid likewise fell far short of expectations, while Elemental proved to be Pixar’s third-straight box office flop.
Disney’s latest release, Indiana and Jones and the Dial of Destiny, is currently on pace to lose money in theaters, although this has more to do with the film’s nearly $300 million production budget than its box-office numbers.
Image: Disney
With Disney losing its magic with moviegoers, what can the company do to turn things around?
Budgets are Bloated
The biggest issue plaguing Disney’s latest releases is budget. The company has an “all-tentpole, all-the-time stratagem that has necessitated the creation of films with at least $200 million dollar production budgets.”
In the past, those budgets were justified as movies were crossing $1 billion worldwide. In 2023, however, those kinds of numbers have simply not been there. With China’s box office a rough terrain for Western films and Russia cut off altogether, studios cannot count on the international box office like they once could.
Photo: Disney/Pixar
“Anything Disney threw out in 2019 made $1 billion,” says Jeff Bock, an analyst with Exhibitor Relations. “Now, it’s more difficult than ever to release a film worldwide. The international landscape has changed. It’s not close to back.”
Cutting production costs also leads to the inevitable questions surrounding quality.
Photo: Disney
“If you cut costs, do you degrade the quality of the product?” says Brandon Nispel, an equity research analyst with KeyBanc Capital Markets. “If you spend less, do people like the movies you are making less? And how much and how fast can you start cutting?”
Streaming Changes Everything
While bloated budgets are certainly a problem for Disney, the other elephant in the room is streaming.
Photo: DIsney+
When Disney released seven films that passed the $1 billion mark in 2019, Disney+ was not yet available, and in most cases, audiences flocked back to theaters for repeat viewings of their favorite films.
Instead of viewing the newest Marvel film three or four times in theaters, fans can now wait until the film lands on Disney+ for repeat viewings.
Photo: Marvel
“People have become conditioned to expect that things will quickly appear on Disney+,” says Neil Macker, a senior equity analyst for Morningstar Research Services. “The theatrical movie business has been in decline for awhile and the pandemic accelerated that.”
In the end, Disney will have to manage the new media landscape by being flexible. The days when the studio could count on billion-dollar tentpoles are likely over, so adapting to streaming and reducing budgets will be paramount.
Photo: Disney
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