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Analysis: Is Disney Setting Up Films To Fail At The Box Office?

Stock Markets May 26, 2022 21:40
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© Reuters. Analysis: Is Disney Setting Up Films To Fail At The Box Office?

Over the past several months, the Walt Disney Co. (NYSE: NYSE:DIS) has fallen into a peculiar habit of scheduling smaller films from its 20th Century Studios and Searchlight Pictures division into theatrical releases against major blockbusters from other Hollywood companies.

The result is always the same: the big pictures steamroll their way across the theatrical landscape while the smaller Disney titles register meager box office returns.

What exactly is going on with this odd distribution pattern? And there is a method to what seems like film exhibition madness?

What Happened: The movie scene for the Memorial Day holiday weekend is certainly going to be dominated by Paramount Global's (NASDAQ: PARAA)(NASDAQ: PARA) long-awaited Tom Cruise film “Top Gun: Maverick” — the entertainment industry trade journals are predicting a $100 million opening weekend.

Only one other film is going into nationwide release against “Top Gun: Maverick”: 20th Century Studios’ animated feature “The Bob’s Burgers Movies.” While that film already has an established fan base from the popular television show “Bob’s Burgers” — which is now in its 12th season — nobody imagines this animated film is going take audiences away from “Top Gun: Maverick.”

In the latter part of 2021, Disney did the same strategy of pitting films from 20th Century Studios and Searchlight against larger action-adventure competition. On Oct. 15, Disney put the 20th Century Studios presentation of Ridley Scott’s medieval epic “The Last Duel” starring Ben Affleck and Matt Damon against “Halloween Kills” from Comcast (NASDAQ:CMCSA) Corporation’s (NASDAQ: CMCSA) Universal Pictures. “Halloween Kills” opened to $50.4 million in U.S. ticket sales while “The Last Duel” absorbed only $4.8 million.

On Oct. 22, Disney put the 20th Century Studios animated film “Ron’s Gone Wrong” up against Warner Bros Discovery Inc.'s (NASDAQ: WBD) highly-anticipated “Dune.” When ticket sales were tallied, “Dune” took in $40.2 million while “Ron’s Gone Wrong” only brought in $7 million.

On Dec. 17, Disney put Searchlight’s “Nightmare Alley” up against Sony Group Corp.'s (NYSE: SONY) “Spider-Man: No Way Home.” This might have been the most painful match-up: “Spider-Man” accumulated $253 million for its U.S. opening weekend, making it the top-grossing December premiere of all time and third only to the $257.6 million gross from "Avengers: Infinity War" in 2018 and the $357.1 million from "Avengers: Endgame" in 2019.

"Spider-Man" had the most financially successful U.S. opening engagement of all time. “Nightmare Alley” squeaked by with $2.95 million for its opening weekend.

There was also the case of the Searchlight horror film “Antlers” that opened Oct. 29. However, there was no major film opening nationwide that weekend: “Dune” was going into its second week in theaters and the only new films in premiere were smaller, under-the-radar productions. “Antlers” took in an anemic $4.16 million against the less-than-vigorous competition.

See Also: Disney Cited In Anaheim Corruption Probe: Report

What Else Happened: In fairness, two films from 20th Century Studios managed to dominate the U.S. box office in their opening weekends: “Free Guy” grossed $28.4 million when it opened last August while “Death on the Nile” took in $12.8 million for its opening weekend in February.

But in both cases, these films opened against very weak competition from new releases: “Free Guy” muscled out the horror-thriller “Don’t Breathe 2” and the Aretha Franklin biopic “Respect” starring Jennifer Hudson while “Death on the Nile” brushed aside the Jennifer Lopez-Owen Wilson rom-com “Marry Me” and the Liam Neeson action film “Blacklight.”

Two other Searchlight titles, “The Eyes of Tammy Faye” and “The French Dispatch,” were in limited theatrical release and were never expanded to the 3,000-plus screen distribution of the other productions.

Why Is This Happening?: The 20th Century Studios and Searchlight films are not Disney-rooted works but are productions that began to take shape before Disney acquired the 21st Century Fox film production companies in March 2019. As these films went into production and then post-production, Disney was contractually obligated to give these works a theatrical release.

Also, while these films were conceived pre-Disney, they were also being released in a post-COVID-19 pandemic environment where audiences were mostly looking for large, loud, energetic adventure flicks with surplus servings of action and attitude. This new environment worked only for “Free Guy” and, not surprisingly, Disney films released under the Marvel banner are automatically guaranteed "ka-ching" returns.

Indeed, consider how other films from these divisions — “Diary of a Wimpy Kid,” “Home Sweet Home Alone,” “Deep Water,” the new “Cheaper by the Dozen” and the upcoming gay rom-com “Fire Island” — bypassed theaters completely and went straight to streaming.

Another Disney division, Pixar, saw its latest animated features “Luca” and “Turning Red” go straight to streaming while Disney-branded “Raya and the Last Dragon” and “Encanto” went into theaters. The next Pixar title, “Lightyear,” is slated for a theatrical release on June 17, although this is an anomaly since the film is playing off the strong IP of the “Toy Story” franchise.

However, this trend might be coming to an end later in the year. Searchlight only has two films slated for release this fall, “The Banshees of Inisherin” and “The Menu,” while 20th Century Studios has “Amsterdam” and "Avatar: The Way of Water," the latter, a follow-up to James Cameron’s 2009 blockbuster, is certain to bring the 20th Century Studios division a much needed over-the-top return at the box office.

Photo: "Bob's Burgers," courtesy Disney

Latest Ratings for DIS

Mar 2022MoffettNathansonMaintainsNeutral
Feb 2022 Citigroup (NYSE:C)MaintainsBuy
Feb 2022JP MorganMaintainsOverweight
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© 2022 Benzinga does not provide investment advice. All rights reserved.

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Analysis: Is Disney Setting Up Films To Fail At The Box Office?

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