Disney’s “boomerang CEO” Bob Iger has a long list of challenges in his return to the job. But even as he was soothing ruffled staff members with a Monday town hall meeting, a new headache was emerging: continued weakness in the company’s animated family-friendly features, and what it means for the Mouse House’s high-profile streaming strategy.
Disney Animation’s Strange World debuted over the long Thanksgiving holiday weekend, but landed with, well, a strange thud. From Friday through Sunday, the film grossed just $12.2 million in domestic box office, $18.7 million over the four-day break.
That was good enough for second place on the weekend, but far behind the $45.6 million brought in by another Disney feature, the Marvel sequel Black Panther: Wakanda Forever, which was in its third week in theaters. Through today, Strange World has brought in $28.7 million worldwide.
That weak opening means the film likely will lose more than $100 million on its theatrical release, according to Variety. The film cost $180 million to make, and incurred tens of millions of dollars in distribution and marketing costs around the globe.
To break even, the film would need to gross around $360 million, double those production costs. And it’s unlikely to get much help overseas to make up the gap. Strange World has brought in just $9.4 million from 43 territories outside the U.S., and it won’t be shown at all in China or Russia, two of the world’s biggest movie markets.
Long-time box-office analyst Paul Dergarabedian, now a senior Comscore analyst, told Variety, “Normally this time of year, a Disney family film is the big draw. It shows we’re still recovering and adapting to the constraints of the pandemic.”
Indeed, that might be the cause of all the problems.
With the exception of a few four-quadrant blockbusters such as Wakanda Forever and Top Gun: Maverick, audiences still aren’t turning out for most movies, of any genre.
Domestic box office topped $11 billion for five straight years before the pandemic hit in early 2020. The combined box office of the nearly three years since has barely topped $13 billion. This year, 11 months of box office brought in about $6.7 billion, from 448 releases, roughly half the 2018 peak of $11.9 billion and 993 films.
But the problem also could be deeper or more complex than just general box-office malaise.
The Strange World underperformance comes just months after another Disney animated project, Pixar’s Lightyear, suffered its own failure to launch.
Yes, the Toy Story spinoff debuted in mid-June with a whopping $51 million. But in the weeks after, it too thudded back to earth, generating just $226 million worldwide before heading to streaming service Disney+ in August.
So, is it just that families are cautious about going to theaters because of the “triple-demic” of Covid, the flu and respiratory syncytial syndrome? Remember that just this year, Universal and Illumination Entertainment’s Minions: The Rise of Gru grossed $939 million worldwide, so may be it’s not that.
Is it that these are so-so movies getting beaten up in a hostile market? That’s certainly possible, though decent critic and audience ratings on Rotten Tomatoes suggest that both films might be expected to have done better.
Could this all be an outgrowth of streaming’s rise, especially for kid-friendly programming? Has Disney trained audiences to wait for the streaming debut, rather than spending $100 or more to take a family to a theater? Should we blame former CEO Bob Chapek and his distribution “czar” Kareem Daniel (who also departed after Iger’s return) for everything, and just move on?
Family-friendly animated films have long been a crucial part of Disney’s “flywheel” of success, where big films lead to big consumer-merchandise sales, theme-park rides, and spinoff projects in books, video, music and so much else. Indeed, the flywheel has been a crucial part of Disney’s approach since Walt himself articulated it in the 1950s.
Iger’s transformative acquisition of Pixar in 2006 further bolstered the importance of family-friendly animation, bringing an entire additional studio whose projects frequently scooped up Oscars and Annie awards for animation. When Disney+ launched three years ago, its extraordinary growth was substantially fueled by all that family-friendly animation, especially after the pandemic locked families in their homes for months.
Chapek and Daniel subsequently steered many Pixar and Disney Animation projects directly to Disney+ in the pandemic’s early days. Even the biggest hits headed to Disney+ within 45 days of theatrical release, far sooner than in pre-pandemic custom.
The strategy varied film by film, and not just for animation. Notoriously, star Scarlett Johansson sued in 2021 for lost profit-sharing revenues after Black Widow bypassed theaters and debuted on Disney+, leading to a public fight that eroded Chapek’s Hollywood relationships.
It’s possible that Chapek and Daniel’s strategy, which made plenty of sense in 2020 and 2021, will make less sense going forward. Should the company pull back on production spending for its animated projects, or spread out how many it makes for theaters while audiences continue to be gun shy about showing up?
Or has the streaming bonanza that has made streaming so successful for Disney have an unintended side effect, training families they need merely wait no more than a few weeks to see those big animated movies on Disney+, paying a monthly subscription that’s roughly the cost of a single movie ticket?
Iger has told Disney employees he’ll reverse the Chapek reorganization that put Daniel in charge of deciding what platform would get which features and series, returning greenlight power to creative executives in each division. He’s also said he’ll continue a hiring freeze that Chapek announced, and will focus on profits versus further adds to subscriber numbers.
Disney’s Marvel and Star Wars franchises are also showing worrisome signs of fan fatigue that now fold in with the animation issues. The long-awaited sequel to Jim Cameron’s Avatar hits theaters next week, with two more sequels coming in the next two years.
Fan favorite feature sequels Disenchanted and Hocus Pocus 2 both went straight to streaming, where their success left industry insiders wondering if they should have taken a turn in theaters first, to generate more revenue.
With less than 700 screens for just one week, the company attracted something like $13.2 million in box office, which led many close observers to speculate what could have been had it been given a longer run. But Co-CEO Reed Hastings, speaking at today’s DealBook Summit conference, made it clear the company was using the run as largely a promotion, designed to heighten awareness and interest in the film’s Netflix debut in late December.
For Iger and Disney, the considerations on timing and spending on further features, streaming series, animated projects, and other content on all those franchises and sequels is now due for review. The company will need to do it with an eye on making the most possible revenue while keeping both Wall Street and Main Street happy.
It all suggests that Bob Iger’s very long to-do list has yet another addition that needs immediate attention. Re-empowering creative executives will make them happy, but there’s a lot more to returning Disney to profitability, in both its legacy divisions and its streaming operations, than just having happy green-lighters. Welcome back, Bob.