Disney's In Trouble - How Did It Get Here?
Disney is in a precarious position. A company once known for making magical experiences is now facing stiff headwinds at many fronts. Despite having a multi-billion dollar market cap, Disney surprisingly only has around $200 million (page 5) in liquidity based on its latest balance sheets. It begs the question, what the hell happened?
The answer is rather multi-faceted and if I were to explain in fine detail, this post would become a novel. Even though it's complex, there is one common theme throughout: Disney shooting itself in the foot.
Box Office Flops
Almost every movie Disney has released in recent memory has lost money. While it has gotten a few wins like Encanto and Guardians of the Galaxy 3 here and there, it's 1 step forward and 10 steps back. Not only have most of Disney's recent films lost money, they lost a lot of money:
- Mulan (2020) - $157 million
- Jungle Cruise - $151 million (supposedly)
- Turning Red - $167 million
- Lightyear - $106 million
- Strange World - $197 million
- Ant-Man and the Wasp - Quantumania - $125 million (maybe)
The recent The Little Mermaid live action is projected to lose somewhere between $20 to $100 million; the upcoming Elemental is projected to earn only $38 million on opening weekend; and the upcoming Indiana Jones and the Dial of Destiny had tepid reception at Cannes and will likely lose money (a $70 million projected domestic opening weekend versus a $295 million budget). The Marvels has been delayed multiple times with several re-shoots, and somehow the visual effects still look subpar. And when taking TV shows into account, She-Hulk and Willow also did poorly. In fact, the latter did so badly that Disney found it more valuable off of Disney+ as a tax write-off.
And it wasn't like these movies were good either. Most of them tend to follow the tired old fad of making female characters OP without the proper development while the male characters act dumb and rude even if it makes little sense. It's quite ironic since Disney had a successful IP that featured a strong female protagonist that it could have used as a reference, but didn't: Kim Possible. Disney also has a bad habit of using identities as crutches and not have them meaningfully contribute to the plot. This led to Lightyear and Willow's downfalls.
Park Woes
Disneyland and Disneyworld have always been the biggest moneymakers for Disney. However, even here, the company is beginning to falter in this department. It made big headlines for the wrong reasons when it announced the $1+ billion Galactic Starcruiser hotel will shut down after only a year. To describe this as dousing a pile of cash with gasoline and lighting it on fire is a massive understatement.
Additionally, Disney is offering summer tickets at unheard of low prices. The 4-park summer ticket goes for a rate for $99/day with Florida residents enjoying a reduced $58/day rate. You would see these rates during the off-season, i.e. when children and college students are still in school. For reference, at the same time last year, tickets would go at a rate of $170/day. And in spite of the reduced prices, Disney has been struggling to fill its parks up.
Legal Mindset - Disney Park Attendance Tanks
Universal + Nintendo = Stiff Competition
As Disney falters, Universal has been taking full advantage of the massive opening. In 2022, DreamWorks produced two big hits, The Bad Guys and Puss in Boots: The Last Wish. The former grossed over $250 million on a $80 budget whereas The Last Wish grossed nearly $500 million on a $90 million budget. Illumination and Nintendo's The Super Mario Bros. movie adaptation easily grossed over $1 billion on just a $100 million budget.
These movies follow a simple, but effective formula: make good characters and make a good story. Princess Peach is depicted as a strong female character, but the movie also respects Mario and emphasizes that its his movie. The Last Wish is surprisingly a masterpiece as it effectively juggled three different villain archetypes and balanced the humor and serious overtones.
What's crazier is that Universal can take away even more from Disney's animated film pie. There are rumors that a Zelda movie is in the works because the Mario movie did so well. Considering how it only took a few days for Tears of the Kingdom to sell over 10 million copies, a Zelda movie may perform really well in the box office provided that it's good. It also means that a theoretical "Nintendo Cinematic Universe" may be extremely lucrative. Nintendo has many other IPs like Splatoon and Metroid that are very popular and can possibly make it to the big screen.
This also plays into the Universal Studios parks. The recently opened Super Nintendo World in Universal Hollywood proved to be popular and it will eventually come to Orlando as part of the Epic Universe in 2025 (and there will also be a How to Train Your Dragon park). Combine that with the already existing Harry Potter park, Universal Studios will have quite a diverse lineup.
Disney Can Turn Things Around, But...
While it's possible for Disney to reverse course, there are a lot of factors that get in its way. Currently, Disney is embroiled in a legal battle against the state of Florida regarding Reedy Creek. The Reedy Creek Improvement District (RCID) has been replaced by the Central Florida Tourism Oversight District (CFTOD) though Disney is still fighting to retain control and the ruling on the case is pending.
Disney also has a big Hulu problem. Right now, Disney holds 2/3 stake while Comcast holds the remainder. However, Comcast wants Disney to buy out the remaining third and they cannot reach to an agreement over Hulu's valuation. Remember, Disney only has $200 million in liquid assets as of now and it has been losing money on movies. Park revenue is declining and the company needs to pay legal expenses for its battle against Florida. The minimum valuation for Hulu is projected to be $27 billion, meaning Disney would have to pay $9 billion in a best case scenario.
It's crazy to think a corporation as large as Disney may be very cash strapped, but there are many signs that point that way. That being said, this situation was 100% avoidable. Had Disney focused more on making good stories and efficiency, then its movies and TV shows would have made profits instead of losing money. Had it taken care of the Marvel and Star Wars IPs better, then the fans would be more engaged and perhaps there wouldn't be a $1 billion hotel flop. As Disney flounders, its competition keeps moving forward.
Disney can turn things around, but time is not on its side and it needs to right the ship... fast.
Check out Legal Mindset's Disney timeline here.
This post is also co-published on Odysee, Publish0x, Read.cash.
Disney is a mammoth company that has so much in reserves that they can probably afford to screw around for a while but even someone with hundreds of billions in the bank doesn't enjoy losing money on basically everything they do. I reckon they can and will turn it around but the current political climate and how they inadvertently decided to get involved has a lot of people boycotting them. IF they can manage to get out of that, I think that people will come back... but it will take some time, perhaps decades. They are big enough to survive that amount of time. They do own almost everything in entertainment after all.
Hey, sorry for the late reply, but I agree. I highly doubt Disney will die, so we'll likely see the company paring stuff back and reload its ammo. That said, the rest of this year is looking to be extremely rough: Elemental flopped hard, The Marvels is looking to do badly, and Disney has to find cash for the Hulu buyout.
I have a feeling by the time Disney finally gets its act together, Universal will have already surpassed them and then some.
I think Disney is an unsinkable ship and they will successfully rebuild. I have seen a story here and there about how they are getting rid of a lot of the people that landed them in this situation in the first place. I think phase one is to get the politics and social programming out of what it is that they make, then the people will come back.
Well, Disney needs to roll out Phase 1 ASAP because it is taking quite a lot of big Ls as of late.
At this point, I think Disney really needs to clean house from top to bottom.
I think Disney will slowly but surely learn that they are going to have to tone it down with the social programming or face real consequences. The boycott of conservatives seems to be very lasting.