Just a few years ago, Disney was riding high with a huge percentage of the market share and multiple movies making over or close to a billion dollars a year. They had massive franchises like Pixar, Star Wars, and Marvel raking in the big bucks, and last year Avatar: The Way of Waterbecame the third highest-grossing movie of all time.
But this year, Pixar's latest animated film Elemental is struggling at the box office, there's no Star Wars movie, and Marvel's Ant-Man: Quantumania struggled out of the gate. While Disney still has some more big titles to realese this year, they're looking at their first year since 2014 (except for COVID-19's 2021 and 2022) that they won’t have a billion-dollar movie at the box office.
How Did We Get Here?
Well, Disney has been pushing a tentpole strategy for a while. These movies cost around $200 million to make and more to market. That means, conservatively, they need to make around $400 million to actually bring a profit back to the studio.
For a time, this was working out. But the industry is so different out of the COVID-19 pademic, and the landscape has changed.
Audiences are not buying tickets at the rate they were before. Disney's former CEO, Bob Chapek, also handicapped them a little by promising most of their movies would hit streaming soon after theaters, thus not incentivizing people to step out when they already pay for an app at home.
In general, the box office is down around 20 percent, so every studio is feeling this heat.
Also, China used to be a place where Hollywood movies made a ton, but now they accept fewer and fewer features, so you cannot rely on them for international sales. And if your movie doesn't travel well, you only have the domestic box office to line your wallet. This is the case for writer/director Great Gerwig's high-anticpated Barbie.
But Disney is the one who really focused in on tentpoles, and if receipts continue crashing they're going to need to reevaluate.
How Can We Fix This Situation?
Well, Disney could change their strategy. They could begin to make three or four mid-budget movies a year again. These would not have the same pressure as tentpoles and would be able to take chances inside the marketplace.
Disney used to make these movies like Herbie and The Parent Trap. They were star-driven family movies that were remakes of some of their '60s classics and needed far less money to be made. If they turned out to be huge hits, you had a nice profit margin. They were able to squeak by even if they were not massive hits because they offered families a PG movie to see.
We really have no one in the market doing that right now. But if anyone is set up for that kind of success, it is Disney. They have a deep catalog and could even fund some original ideas if they wanted to.
Hollywood is changing incredibly fast, so maybe these trends will break or steer a different direction.
We'll let you know as it plays out.