Disney’s Robert Iger faces troubled animation market as ‘Strange World’ bombs

Walt Disney chief executive officer Robert Iger. Photo: Bloomberg
Walt Disney chief executive officer Robert Iger. Photo: Bloomberg

Summary

Entertainment giant’s latest release becomes its second straight animated flop, after ‘Lightyear’

LOS ANGELES : Add Walt Disney Co.’s animation woes to Robert Iger’s to-do list.

The company’s latest release, “Strange World," this weekend became the second consecutive Disney animated offering to bomb at the box office, collecting a measly $18.6 million since opening Wednesday.

That showing marks the second 2022 misfire from Disney, after this summer’s “Lightyear"—an unusual record for a company long considered a guaranteed hitmaker in children’s entertainment.

It has been years since Disney’s animation division has experienced a theatrical performance as bad as “Strange World." In March 2021, the company’s “Raya and the Last Dragon" opened to $8.5 million amid a pandemic landscape that saw moviegoing plummet, but other examples of such a low opening are more than 10 years old.

Disney can weather a miss or two. But the poor performance of “Strange World" highlights one of the issues facing Mr. Iger, who was Disney’s chief executive from 2005 to 2020 and returned to the top job last week when the company’s board of directors shocked Hollywood and fired his one-time successor, Bob Chapek. He returns to a theatrical environment far harsher to animated releases than the one he left.

Among Disney employees, the distribution of the company’s animated movies was considered one of the crucial differences between Messrs. Iger and Chapek.

Under Mr. Chapek, several would-be theatrical titles were shipped to Disney streaming services when Covid-19 closed theaters and the company had given priority to boosting subscriber numbers.

In his first few days on the job, Mr. Iger said he planned to unwind significant parts of Mr. Chapek’s reorganization of the company that helped determine where and when movies made their debuts.

Disney certainly wasn’t alone in using theatrical releases to bolster nascent streaming services. With auditoriums closed and moviegoing depressed amid the pandemic, many major studios began skipping the theater in some instances in favor of in-house services, a flexible approach that has held even as multiplexes reopen.

Over the past two years, Disney’s core animation divisions—Walt Disney Animation and Pixar Animation—were among those particularly called on to help drive subscriptions on the company’s flagship streaming service, Disney+.

Pixar’s “Soul," “Luca" and “Turning Red" all made debuts on the service throughout 2020 and 2022, rankling some employees who interpreted the release shift as a demotion, and worrying some executives who feared it would acclimate consumers to watching all Disney movies at home rather than paying for them in theaters, according to people familiar with the matter.

The company’s first major release since Covid-19 shut most theaters, last Thanksgiving’s “Encanto," collected a disappointing $96 million in the U.S. and Canada, but found new fans during its premiere on Disney+ soon after. “Lightyear," an installment in the blockbuster “Toy Story" franchise, made its debut exclusively in theaters in June and significantly underperformed, with a domestic gross of $118 million.

The shifting strategies—some movies to Disney+, some to theaters, some to both—was, to critics of Mr. Chapek’s, partly a consequence of a reorganization that gave more control of distribution strategy to executives housed within the Disney Media and Entertainment Distribution division. While creative executives at Disney Animation and Pixar would oversee production, executives within DMED would rule on what distribution path was best for a particular show or movie.

Mr. Chapek argued the delineation streamlined decisions and allowed clear-eyed analysis of what distribution route would work best for any production.

“Our creative teams will concentrate on what they do best—making world-class, franchise-based content—while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms," Mr. Chapek said when he announced the reorganization in October 2020, eight months after being named CEO.

This past week, days after returning as CEO, Mr. Iger said that the head of DMED, Kareem Daniel, was leaving the company and that he had asked four lieutenants to suggest a “new structure that puts more decision-making back in the hands of our creative teams."

“It is my intention to restructure things in a way that honors and respects creativity as the heart and soul of who we are," he wrote in a letter to employees. “I fundamentally believe that storytelling is what fuels this company, and it belongs at the center of how we organize our businesses."

More broadly, Mr. Iger will have to navigate a theatrical marketplace different than the one he left, one that has rejected more than just Disney’s family entertainment.

Since 2020, only one animated movie—“Minions: The Rise of Gru"—has been a bona fide hit. “Minions" collected $369 million earlier this year; no other animated movie since 2020 has made more than $175 million. From 2017 to 2019—the last three full years of Mr. Iger’s first round as Disney CEO—10 did.

Two animated releases—“Elemental" and “Wish"—are on Disney’s release schedule for 2023.

“Strange World" follows a family of explorers recruited to rescue a precious energy source. Opening-weekend audiences gave “Strange World" a “B" grade, according to the CinemaScore market-research firm; Disney animated movies typically record grades in the “A" range.

Like other Disney releases, “Strange World" is expected to debut on Disney+ in the weeks ahead—a successful tactic for “Encanto" last year. The “Encanto" song “We Don’t Talk About Bruno" became a viral hit when fans found it on streaming.

“‘Encanto’ proved to be a significant success by having its Disney+ launch shortly after its theatrical launch," said Tony Chambers, Disney’s head of theatrical distribution.

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