Why Disney Can't Make Hits Like It Used To

Once a sure thing at the box office, Disney has experienced an unprecedented string of box office flops both domestically and in critical markets such as China.

Despite strong showings with Avatar: The Way of Water, which brought in a whopping $2.3 billion around the world, and Guardians of the Galaxy Vol.3, which has made almost $850 million globally, the past year has been lackluster for Disney.

What once would have been sure fire hit such as Indiana Jones and the Dial of Destiny, which is Harrison Ford's last outing as the famous archaeologist, has made just $369 million globally, only a tad more than its budget of $295 million.

"Remember that of the $369 million, the studio will only garner about 60 percent of that amount or $180 million," Mark Young, from the School of Accounting at the University of Southern California (USC), told Newsweek, highlighting just how much of a flop the film has been.

Other titles which underperformed for Disney over the past year include Marvel's Ant-Man and the Wasp: Quantumania, Lightyear, The Little Mermaid and Strange World. Pixar animated studios also suffered its worst opening in 28 years with Elemental, which made just under $30 million on its opening in the U.S., according to Box Office Mojo.

The disappointing returns at cinemas has cost Disney at least $1 billion, according to Forbes, a fact not lost of the company's CEO, Bob Iger.

"The studio has had a tremendous run over the past decade, perhaps the greatest run that any studio has ever had, with multiple billion dollar hits... that said, the performance of some of our recent films has definitely been disappointing and we don't take that lightly," Iger said during the company's 2023 third-quarter financial results call on Wednesday.

"As you'd expect, we're very focused on improving the quality and the performance of the films that we've got coming up. It's something that I'm working closely with the studio on. I'm personally committed to spending more time and attention on that as well."

The reasons behind Disney's bad box office run might seem obvious, such as how cinemas are still trying to bounce back after the COVID-19 pandemic, but experts argue the studio needs to start making more "bracingly fresh films." Recycling old intellectual property (IP), like Indiana Jones or the live action remake of The Little Mermaid, has turned audiences off.

Young said since acquiring Marvel and churning out endless movies and TV shows on its streaming service, Disney+, people are suffering from "superhero fatigue because these movies tend to be highly formulaic."

For UCLA lecturer and film producer Tom Nunan, Disney has mistakenly lent into "an over-reliance on the familiar."

"When we see Barbie from Warner Bros Studio and Oppenheimer from Universal performing so well, the message seems clear: 'make original, bracingly fresh films and the audience will show up,'" he told Newsweek.

"By most measures, the bets they took were considered reliable ones and anyone in their position would've likely done the same. Disney's efforts have been substantial, upscale, and professional—just uninspiring and not as groundbreaking as what's called for these days."

In the 2000s, Disney went on a shopping spree, buying up studios such as Marvel, Pixar and Lucasfilm, which gave us both the Star Wars and Indiana Jones franchises.

All of these studios only make big budget content, whereas prior to the acquisition, Disney had different budget levels for its productions. And where there is a lot of money being spent comes big risk. So it makes sense the studios would rely on a formula proven to work.

"One cannot blame a studio for following formulae as this approach has been successful in the past, but I think things have now come to a head. Studios need to get ahead of the curve and deliver something very new," Young explained.

Even though Disney may struggle to make its money back on these films from cinema sales, they will continue having value on Disney+ for years to come, according to Kimberly Owczarski, associate professor at the Texas Christian University.

"They released too many films in a short time frame in what was already a crowded summer of competition," she explained, and added: "They have relied too much on franchises that are either skewing older or there are too many texts to keep track of in theaters and on streaming, like with the Marvel properties.

"Word-of-mouth wasn't great on several of these films, either, which certainly kept those who weren't diehard fans from going to theaters and instead they just wait for their streaming debuts. With such a short turnaround from theaters to Disney+, there's no real need to spend so much money going to a movie theater for a less than stellar film."

Allègre Hadida from the University of Cambridge Judge Business School agreed, and added that the rising cost of living means people will more likely wait to watch a title on Disney+, especially because of the convenience of being able to watch "ATAWAD (anytime, anywhere, on any device)."

"This effect may be amplified as purchasing power is affected by high inflation rates," she explained to Newsweek.

But even though Disney has had some unprecedented box office failures this year, it was still on track to be one biggest distributors and earners of the year with all of its releases combined.

"While some theatrical releases have underperformed and Disney+ subscriptions have decreased over the past few months, Disney is still very much a force to reckon with in the global entertainment industry. They lead the global box office in 2022 and in the first six months of 2023 (with US$3.4 bn in revenue)," Hadida explained.

So how does Disney bounce back?

"I think they need new IP and totally new characters and a new vision for the studio. It seems clear that going back to the same well over and over again will only lead to more failure. In other words, a new strategy is needed and this is going to require a new deal with the writers," Young explained.

Owczarski agreed, saying, "original stories typically cost less to make than franchise properties, so investing a bit more in them may lead to some bigger returns in the long run," and pointed out that while they had slow starts, Elemental and The Little Mermaid eventually brought in good audiences.

"[They] played well in theaters since their debut because of the lack of family-oriented films in the market this summer. Disney performs its best when it can tap into that audience and they have made fewer films geared to it in recent years. So they need to focus on films for the family audience again," Owczarski added.

Disney also has an "unparalleled" library of IP that it can tap into, but it can only do so if they "approach their content with the same boldness, audacity, fun, and depth as Warner Bros did with Barbie," according to Nunan.

"Today's audience is looking for really fresh, startling uniqueness. It's all within Disney's reach," he said.

"Failure usually leads to one of two outcomes: fear and retrenchment, or bold reinvention. My hope is the company will embrace bold reinvention in the feature space. The franchises and characters are beloved—let's hope the Disney folks embrace courage over fear."

Young suggested "as a different strategy," Disney+ should go into its catalogue and bring out more movies that baby boomers and Gen X'ers find appealing, with the potential of also finding new audiences.

"Many of their great films are not on the service. Disney has a catalogue of over 800 properties... in some cases, there might be rights or restoration issues, but it seems to me that these costs pale in comparison to creating another $200 million blockbuster," he said.

"My point in mentioning this is that executives may be completely unaware of what they have in their libraries and younger employees may not be old enough to even know about these classics so there is a disconnection."

As for Disney's outlook, Owczarski does not feel too concerned for the Mouse House's future.

"Disney may be experiencing a rough patch with its properties this summer in theaters, but the rest of the year has some strong box office potential," she said.

"They will likely remain the top overall distributor globally, even despite some key challenges in 2023."