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Is Disney losing its charm? The new reality of flops and mishits

Are Disney Films losing their market share?

For the past decade, Disney has withstood the tectonic changes impacting the film industry, fortified by its key properties such as Marvel, Lucasfilm, and Pixar. However, this year has shown cracks in the long-reigning titan of the box office as four of its biggest releases, including “Ant-Man and the Wasp: Quantumania,” “The Little Mermaid,” “Elemental,” and “Indiana Jones and the Dial of Destiny,” have struggled in theaters. These films, which seemed like potential hits on paper, lacked the Disney sparkle when it came to filling movie theater seats.

Numbers not inspiring at all

Guardians of the Galaxy Vol. 3” is projected to be Disney‘s biggest earner of the year, reaching $835 million. This marks the first time since 2014, except for the pandemic-affected years, that Disney won’t have a billion-dollar movie. Although Disney still commands 37% of the industry’s revenues in 2023, ticket sales for its films have declined, especially compared to its record-breaking year in 2019. Recent releases have received mixed reviews from critics, while audiences have been more forgiving, giving respectable ratings on platforms like Rotten Tomatoes and CinemaScore.

In addition to market conditions, Disney faces other challenges. Its all-tentpole strategy means each film requires a production budget of at least $200 million, plus marketing costs of roughly $100 million. This high benchmark for breaking even at the box office is riskier in the current landscape, with the international box office diminished due to tensions with China and Russia being cut off from Hollywood movies. These factors impact Disney’s profitability, and while other studios face similar challenges, Disney’s historic success magnifies the impact on the industry.

Uncontrollable costs

Getting costs under control will take time, as major movies require years of development, production, and distribution. While pandemic delays and enhanced COVID testing have inflated budgets for 2023 releases, cost savings are expected as the pandemic becomes less disruptive. Disney may explore areas to save money, such as marketing or cutting back on special effects, but reducing costs without degrading the quality of the product remains a concern.

The turn in fortunes is not solely due to market conditions but also a mix of creative shortfalls and increased attention on streaming. The launch of Disney+ reduced the need for repeat theater viewings, impacting box office numbers. Pixar, in particular, has struggled as several titles went directly to Disney+. The animation studio faces heightened competition in the animation space from other studios that spend less on budget. “Star Wars” has also seen a decline in theater success as it found success on Disney+ with series like “The Mandalorian.” The franchise’s future trilogy plans have faced delays and uncertainties.

Disney faces broader challenges as a media conglomerate, including Wall Street’s unrest over Disney+, concerns about its parks business, and the rise in cord-cutting impacting its cable properties like ESPN. These factors contribute to Disney’s share price decline, and the struggles with its movies add to the overall concerns.

Disney’s film business has long been a stabilizing force, but its successful formula of leaning into nostalgia may be losing its effectiveness. Live-action remakes of classics were box office successes, but the lackluster performance of “The Little Mermaid” indicates brand familiarity alone is no longer enough to attract audiences to theaters. Launching new original franchises has proven challenging, with “Frozen” being one of the few successes.

Despite some movies functioning as loss leaders, Disney benefits from merchandise sales and the longevity of its properties. The return of characters like Ariel helps sell themed products and boost interest in theme parks. Unlike other studios that rely on box office revenue, Disney has other avenues for profit.

Hence, while Disney still maintains a significant market share, its recent struggles in the box office highlight the challenges it faces in an evolving industry. It will take time for the company to adapt and find new strategies for success, but its strong brand and diversified revenue streams provide a foundation for future growth.

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