Smaller 2017 Slate Means More Risk at Disney

Disney dominated the box office last year thanks to several big franchises among its 13 releases. In fact, Disney has been the most profitable studio for the last three years, with the other majors well behind, particularly over the past two years. But the studio has just eight movies on its 2017 slate, a reduction that makes each of its bets that much riskier.

Disney took more than 20% of the domestic and global box office in 2016 and had all five of the top-grossing films globally. In a year when 39% of the box office of the top 100 movies came from sequels and franchises, the studio accounted for half that total with just six movies. But it had another seven original movies on its slate, several of them smaller pictures. The 2017 lineup comprises six franchise films (“Guardians of the Galaxy Vol. 2,” “Pirates of the Caribbean: Dead Men Tell No Tales,” “Cars 3,” “Thor: Ragnarok,” “Star Wars: The Last Jedi,” and a “Beauty and the Beast” remake) and two originals (“Born in China” and “Coco”).

sources: Company Reporting, jackdaw research Analysis

Disney’s strategy over the last few years of focusing on fewer, bigger pictures has paid off, allowing the studio to target marketing. This year it’s taking that strategy to a new extreme: All but one of its films are big-budget productions, which have to pay off if the studio is to maintain its high margins. With fewer films, Disney already risks a revenue decline; if one or more movies should disappoint at the box office, profits will decline even more.

CEO Bob Iger’s comments on an earnings call suggest that the company is banking on the fact that the 30 Disney and Pixar animated movies released in the past 10 years or so have averaged $800 million at the box office. But not all the 2017 releases are animated, and one (“Born in China”) is a documentary in the Disneynature series, none of which has grossed more than $30 million.

sources: Company Reporting, jackdaw research Analysis

There is, of course, upside to the studio’s strategy. If its films do as well as it expects, it could have another year of multibillion-dollar gross movies. And at Disney, it’s never just about theatrical revenue — the merchandizing and games business could use a boost after a down year in 2016, while theme parks would likely benefit from a good year at the cinema.

In the meantime, the question is whether any other major studio will be able to match Disney’s 2016 in the near future — including Disney itself. For now that seems highly unlikely.

Jan Dawson is the founder and chief analyst at Jackdaw Research, an advisory firm for the consumer technology market.

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