Iger’s Disney Handed First Blow by ‘Avatar’

By Douglas A. McIntyre Published Dec 19, 7:30AM EST

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“Avatar: The Way of Water” was supposed to be a sure thing for Disney. The 2009 movie “Avatar” brought in $2.9 billion. According to Barron’s, the new version brought in $135 million, which was below expectations. Overseas, the film’s ticket sales were $310 million. The movie may lose money. The underperformance serves Disney’s new CEO Bob Iger his first piece of really bad news.
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Disney’s early regret may have been what it cost to make the film, which was about $350 million. The recent costs of making blockbuster films have made them riskier financially.
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Disney could count on movie success before the pandemic as a key driver of both revenue and profits. Disney’s box office market share over the past 10 years was extraordinary, averaging about 12%. That figure was even higher from 2016 to 2019. The success of this segment, along with theme parks, was Disney’s earnings engine.
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Disney needs to make up for the disaster of its streaming business financially. It lost $1.5 billion in the most recently reported quarter. Because its streaming subscriber growth has slowed, and its underpriced products like Disney+, it may take years to repair this Disney division, if it is repaired completely.
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Disney finds its streaming business looks like the movie business. Subscriber market share is as critical as ticket sales. Disney has to contend with streaming giants Netflix and Amazon. A dozen other smaller media companies also have staked their financial figures on doing well in the segment. Lurking in the wings, Apple TV+ is funded by Apple’s deep balance sheet and the fact it can offer its service to the billion-plus people who own iPhones, iPads and Macs.

Theme parks will continue to provide Disney with a solid foundation for its earnings. Movies and streaming may not.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.