After garnering immense success in the 1940s and ’50s, The Walt Disney Company established itself as a leader in the animation industry. And after acquiring its own film studio division, Walt Disney Studios, the multinational mass media and entertainment conglomerate expanded its operations to television, broadcasting, as well as online streaming platforms. However, despite the immense success witnessed by the organization, the recent statistics suggest a rocky road ahead.
Famous financial and box office analyst, Valliant Renegade, recently shared his calculations and speculations, suggesting that The Walt Disney Company has suffered significant losses at the box office in the past year, amounting to nearly $900 million.
Valliant Renegade reveals that Disney is ‘bleeding out’ at the box-office
Valliant Renegade examined the budgets and estimated marketing costs of eight recent releases from Disney-owned studios, including highly anticipated titles such as Lightyear, Thor: Love and Thunder, Strange World, Black Panther: Wakanda Forever, Ant-Man and the Wasp: Quantumania, Guardians of the Galaxy Vol. 3, The Little Mermaid, and Elemental. And based on his analysis, the total cost of producing these films was estimated to be around $2.75 billion.
Furthermore, Renegade also analyzed the box office returns that Disney typically receives, revealing that the collection received could be approximately appropriated to 55% from domestic grosses, 43% from international grosses, and 25% from the Chinese box office.
Taking these percentages into account, the financial analyst also calculated that the cumulative returns from the aforementioned films amounted to $1.86 billion. Consequently, by subtracting the total cost of production from the returns, Renegade arrived at a box office loss of around $890 million.
However, Renegade emphasized that this calculation solely represents the box office losses and does not include the economic opportunity costs Disney has incurred by refraining from licensing its films to streaming platforms like Netflix, Warner Bros. Discovery, Prime Video, Paramount, or Comcast.
In the past, Disney had lucrative licensing contracts with these platforms, generating billions of dollars in revenue. But since the launch of Disney+, the company has retained its content exclusively for its own streaming service, ending all third-party licensing deals.
Valliant Renegade reveals how Disney + has impacted the company’s finances
While discussing the statistics, Renegade introduced a hypothetical scenario, suggesting that each film could have potentially earned $125 million through a licensing agreement with another streaming platform. Multiplying this value by eight (the number of films analyzed), Renegade estimated the economic opportunity loss to be around a staggering $1 billion.
Notably, Disney has managed to offset these losses in the short term by leveraging revenue streams from its theme parks and linear TV platforms, particularly through live sports content. However, Renegade warned that this approach might not be sustainable in the long run, emphasizing the urgency for the company to reassess its decisions and distribution strategies.
There’s no doubt that the estimations presented by Renegade regarding Disney’s box office losses and missed licensing opportunities highlight significant challenges faced by the entertainment giant. And accepting the issues faced by the organization, Disney is determined to turn around the situation.
During the company’s Quarter 1 (FY 2023) Earnings Results webcast, Disney’s CEO, Bob Iger, acknowledged the escalating costs and diminishing returns at the box office. Moreover, Iger also expressed the need to focus on core franchises and brands while reducing overall production costs, highlighting the importance of maintaining quality on screen while evaluating the associated expenses.
Source: YouTube
